Many people are living paycheck to paycheck, struggling to make ends meet. One of the best ways to get out of this cycle is by increasing your credit card limit.
Doing so will allow you more freedom with your money and help you save for emergencies in the future. If that sounds like something you want, then keep reading!
We’re going to give you six smart tips on how to increase your credit card limit with ease.
What is a Credit Card limit?
The Credit Card Limit is the usage restriction imposed by a credit card company on a specific card. In other words, it’s the maximum amount you can spend with your credit card. If your Bank or the Credit Card firm has set a limit of Rs 50,000 on your Credit Card, for example, you won’t be allowed to use it to buy items in excess of Rs 50,000.
How to Increase your Credit Card Limit?
You have a few different options when it comes to increasing your credit card limit. We’ll get into that later on!
Before we do anything else, let’s talk about your credit score and how it can affect your chances of getting a higher limit.
Remember, the better your score is, the more likely you’ll be to get approved for an increase in Credit Card Limit! However, the lower your score or history of making payments on time will greatly decrease these probabilities.
If this is your first time with a credit card or you’ve had one for less than six months, it’s unlikely that the Bank will give you an increase in the limit.
Why? Because they don’t have enough information about your spending habits yet! Keep using this Credit Card responsibly and paying on time until the company decides to up your limits again.
If you’re a responsible Credit Card user and have been using your card for a while, it’s time to take some action.
And that brings us to the first tip on how to increase your credit limit:
Tip #01 – Only use Money You Can Afford.
Remember, the whole point of getting a Credit Card is to help you buy things that you couldn’t afford with cash. But there’s no reason why your credit card should be used for items on which you can’t pay in full.
What we mean is this: if your rent or utility bills are due next month and all your money has been spent on your credit card, you should not use this Credit Card to buy things.
This defeats the purpose of having a second source of funds in the first place! Instead, wait until next month when your bills are due and pay them off with that increased limit.
If you’re struggling financially or just want a higher limit for emergencies, you’ll want to avoid the next tip.
Tip #02 – Boost Your Credit Score
Some people will take out a loan on their credit card to pay for items they need, such as groceries or home appliances.
While this might seem like an easy solution at first glance, it’s actually very dangerous! Why? Because you’re borrowing money that isn’t yours and paying interest on top of it!
If you’re struggling with your finances, it’s better to wait until next month and save up some money. This will allow you to get these items for free or at a much lower price.
Tip #03 – Ask for a Lower Interest Rate
If you’re already using your credit card and can’t get out of this cycle, it might be time to ask for a lower interest rate.
Remember: the higher the interest rate on your Credit Card is, the more money you’ll end up spending in total! If there’s no chance that you’ll ever pay off your Credit Card debt within a short amount of time, it’s best to avoid this option.
If you have an excellent credit rating and a history of paying bills on time, however, then there is hope!
In some cases, Banks will offer lower interest rates if you ask for one. All that matters is that they see that you’re a responsible Credit Card user and that they trust you to pay back your debts.
Of course, this doesn’t mean that the Bank will give you whatever rate you ask for! You’ll need to be reasonable about it and negotiate with them on what’s possible so both of you can come out happy in the end.
Tip #04: Repay dues on time.
If you’re already struggling to pay off your Credit Card debt, then this tip is probably the least important one for you.
But if things are looking up and you have extra money each month that’s not going towards anything else, try paying down your credit card bill early!
This will give you an opportunity to improve your credit score and show the Bank how responsible you are as a borrower.
Tip #05: Show proof of increase in income
If you’ve been using your Credit Card responsibly for the past six months, then it’s time to show proof of income.
Without any evidence that your creditworthiness has improved since their last review of your account, there is no reason for banks to give you a higher limit!
To do this: simply take out some money from an ATM machine and deposit it into your bank account. Then, show the last six months of statements to prove that you have been earning money on a consistent basis.
Tip #06: Reduce the financial obligations you have.
The best way to do this is by paying off your debts in full. If you don’t have enough money to pay it all, ask the creditor if they can reduce their demands until you’re back on track with your finances!
Here are six effective ways to get your Credit Card limit increased. The most important one is #04: Repay dues on time. If you do that, then the others will be easy!