How To increase a credit card limit’s - 7 ways raise credit card limit

Credit cards have become an integral part of modern financial management, offering convenience and financial flexibility. Whether it's for daily expenses, emergencies, or significant purchases, a credit card can be a reliable tool in your financial arsenal. However, as your expenses grow, you might find your existing credit limit insufficient. This is where increasing your credit card limit comes into play. Not only does it provide more financial leeway, but it also offers additional benefits, such as a boost to your credit score.

What is a credit card limit?
 

A credit card limit is the maximum amount of money you can borrow using your credit card. It is determined by the card issuer based on various factors including your credit score, income, and credit history. The limit ensures that you don't overspend beyond a certain threshold, helping both you and the bank manage financial risk. However, this limit is not a fixed sum, it can be increased or decreased by the card issuer periodically. Staying within this limit is crucial to maintaining a healthy credit score and avoiding over-limit fees.

A higher credit limit not only offers more spending flexibility but can also positively impact your credit utilisation ratio, an essential factor in maintaining a good credit score.

Ways to increase your credit card limit
 

1.  Maintain a strong credit score

Your credit score is one of the most significant factors that banks consider when determining your credit card limit. A higher credit score indicates that you are a low-risk borrower, making you eligible for a higher limit. To improve your credit score, ensure that you pay your bills on time, keep your credit utilisation ratio low, and avoid applying for multiple credit cards in a short period.

In case, you don’t have a credit profile, you can opt for IDFC FIRST Bank FIRSTearn credit card that comes with no credit verification or salary checks. It is a FD secured credit card which offers a credit limit of more than 100% of your fixed deposits. The card comes with several shopping benefits like 1% cashback on every spend via IDFC FIRST Bank app, 0.5% cashback on utility bills and insurance payments, up to ₹100 discount on movie tickets, and complimentary roadside assistance.

2.  Regularly use your credit card

Consistent and responsible use of your credit card can demonstrate to the bank that you manage credit well. Regular usage followed by timely payments can build a positive credit history, which can make you a strong candidate for a limit increase. However, ensure that you don't exceed 30% of your current limit to maintain a low credit utilisation ratio.

3.  Increase your income

Your income is another critical factor that determines your credit card limit. If your income increases, you can provide proof of the same to your bank, making a strong case for a limit increase. Banks often view higher income as a sign of greater repayment capacity, which can lead to an enhanced credit limit.

4.  Request a limit increase from your bank

If you have been a responsible credit card user, you can directly request your bank for a limit increase. This can be done through the bank's online portal, customer service, or by visiting a branch. Make sure you highlight your strong credit history, increased income, or any other relevant factors that support your request.

5.   Reduce existing debt

A lower debt-to-income ratio (the ratio of your total monthly debt payments to your monthly gross income) signals that you are managing your debts well. By paying off existing loans or credit card balances, you can improve this ratio, making it easier to qualify for a higher credit limit.

6.  Update your information

Sometimes banks may not be aware of any change in your financial status which could make you eligible for a higher credit card limit. You would have received a substantial pay hike in the past few months, but you might be still using your old credit card with a pre-set limit. In such cases, you can inform your bank and ask them to increase your limit on your new card or issue a new card with a higher limit.

You should also consolidate your accounts to give the bank a better financial picture. Instead of having several bank accounts with small sums in each, put all your money in one account. This will offer a better picture of your finances.

7.  Wait for an automatic increase

Some banks automatically increase your credit limit after a period of consistent use and timely payments. While this might take some time, it requires no effort on your part. Keep using your card responsibly, and you might find your limit increased without even having to ask.

Benefits of increasing credit card limits
 

1.  Enhanced financial flexibility

A higher credit limit gives you more spending power, allowing you to make larger purchases or manage emergencies without worrying about exceeding your limit.

2.  Improved credit score

A higher credit limit can lower your credit utilisation ratio, which positively impacts your credit score, making you eligible for better financial products.

3.   Better rewards

With a higher limit, you can take advantage of more significant rewards and cashback offers, as you can spend more without worrying about maxing out your card.

4.  Higher loan eligibility

A high credit limit indicates strong financial management, which can enhance your eligibility for loans and other credit products.

5.  Convenience in emergencies

In unexpected situations, a higher limit ensures you have the necessary funds available, providing peace of mind.

How do I request a credit limit increase on my credit card?
 

To request a credit card limit increase, you need to contact your issuing bank. Several banks offer the online method to request an increase on your credit limit. To raise a request online, log in to your credit card account through your bank’s online portal, navigate to the credit limit increase section, and follow the instructions. Alternatively, you can call customer service or visit a branch. Be prepared to provide updated financial information, such as proof of income, and highlight your responsible credit usage. The bank will review your request, and if you meet the criteria, your limit will be increased.

Things to consider before requesting a credit card limit increase
 

1.   Spending habits

Assess whether you genuinely need a higher limit or if it might lead to unnecessary spending. Only request an increase if it aligns with your financial goals.

2.  Impact on credit score

While a higher limit can improve your credit score, a hard inquiry during the request process might temporarily lower it. Consider this before making a request.

3.  Existing debt

If you already have substantial debt, it might be wiser to focus on paying it off before increasing your credit limit to avoid falling deeper into debt.

4.  Bank’s policies

Different banks have different policies for credit limit increases. Familiarise yourself with your bank’s requirements and procedures to ensure a smooth process.

Difference between the total credit limit and available credit limit
 

The total credit limit is the maximum amount of credit that your card issuer has granted you. For instance, if your total credit limit is ₹1,00,000, that is the maximum amount you can charge on your card. The available credit limit, on the other hand, is the remaining credit that you can use after accounting for any outstanding balances. If you have already spent ₹40,000, your available credit limit would be ₹60,000. Keeping track of your available limit is crucial to avoid overstepping your total credit limit and incurring penalties.

Conclusion

Increasing your credit card limit is a strategic decision that can enhance your financial flexibility and creditworthiness. However, it’s vital to evaluate your spending habits and the potential risks involved. By responsibly managing your credit and making informed decisions, you can unlock numerous benefits, such as better rewards, improved credit scores, and financial convenience.

If you're considering a credit card upgrade, explore IDFC FIRST Bank Credit Cards, which offer attractive benefits, competitive rates, and tailored features to suit your lifestyle, making your financial journey both rewarding and secure. If you prefer to enjoy the finer things in everyday life explore metal credit cards from IDFC FIRST Bank that come with modern day privileges with a touch of Indian history.