Credit Card Limit: How do banks set credit card limits? Understand the complete process of increasing your limit..

How to Increase Your Credit Card Limit: In today's world, a credit card is not just a plastic card, but the key to your financial freedom. But have you ever wondered why your friend's credit limit is in the lakhs while yours is stuck in the thousands? How exactly do banks determine credit card limits? If you also want to increase your credit limit, then this information is very useful for you. Let's understand the complete calculation behind credit limits.

How is the credit limit determined?
Before lending you money, banks thoroughly examine your financial history. There are three major factors behind determining the limit, which include:

First, the bank looks at how much you earn per month. The higher your salary or business income, the less risk the bank perceives, and the higher the limit you receive.

Your credit score is your report card. If you have paid your old loans or bills on time, your score will be 750+. A high score means a green signal and a higher limit.

If half of your salary is going towards paying EMIs for old loans, the bank will hesitate to give you a new limit.

Increasing your limit doesn't mean you should spend indiscriminately. Remember, this is the bank's money, which you have to repay with interest.

Want to increase your limit? Try these 4 super methods
If your current limit is low and you want to increase it, these methods will help you:

Update your salary slip
Has your salary increased? If yes, send your new salary slip or IT return to the bank. When the bank sees that your income has increased, they will themselves offer to increase your limit.

Pay bills on time
This is the oldest and most effective method. If you consistently pay your bills before the due date for 6 to 12 months, the bank will consider you a trustworthy customer.

Keep track of credit utilization.
Let's say your limit is ₹1 lakh; don't spend the entire ₹1 lakh every month. Use only 30-40% of your limit. This makes the bank believe that you are not desperate for credit and that you manage your finances well.

Contact the bank directly.
You can request a credit limit increase by calling the bank's customer care or through their app. If your credit history is clean, the bank will usually approve it immediately.

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