Credit Card popularly known as plastic money is one of the most popular payment instruments in the current era. By using a credit card, the holder can borrow money from the bank to make a purchase.
The credit cardholder will have to repay the borrowed money within 25 - 30 days hence no interest will be levied. If the payment is late, then the borrower will have to pay additional charges along with the initially borrowed money from the bank.
By using the credit card, the holder can make purchases up to a limit pre-set by the bank at the time of issuing the card, this is called Credit Limit.
For Example: If Mr Murthy has a credit card secured from SBI and the credit card limit stands at Rs 10,000 per month. Then Murthy cannot spend beyond Rs 10,000 per month on the card.
Usually, the credit limit varies based on the types of the card and the issuer (bank) and will be on the eligibility of the customer.
A higher credit card limit will provide the holder with higher purchasing power.
Let's understand How to Increase Credit Card Limit?
Improving the CIBIL Score
CIBIL score acts as one of the basic requirements to secure the credit card. CIBIL score indicates the financial stability of an individual and hence most of the financial companies and banks look into this score before issuing a credit card.
Higher the CIBIL score provides an individual with a better chance to increase the credit limit.
Requesting for Increase in Credit Limit
The cardholder can request the bank for increasing the credit limit. Nowadays, most of the banks in India provide an option for the credit card holders for increasing the credit limit by raising a request in the online portal. The concerned bank officials will go through the past payment history, salary account details, spending habits and so on and make a final decision whether to approve the request for increasing the credit limit or not.
In some cases, banks will ask the credit cardholders to submit proof of their current take-home salary to assess the financial stability, creditworthiness of an individual. If the cardholder holds good credit history then there is a high chance that your request for credit limit increase will be approved.
Increasing the Fixed Deposit Amount
One of the ways, the credit cardholder can increase their credit limit is by increasing the amount parked in the fixed deposit scheme. Some of the banks in India, do offer credit card based on the fixed deposit opened by the cardholder with them. It holds good if the credit card is secured one and issued against the fixed deposit.
By adding more money in the fixed deposit scheme, the cardholder can increase the credit limit.
Note: Credit Card is secured and issued against a fixed deposit will have a credit limit of 80% of the total investment.
Upgradation of Credit Card
Existing credit cardholders can ask their banks for upgradation of their credit cards. The cardholder will have to request the bank about the eligibility criteria for upgrading the existing credit card. In the case of upgradation of an existing card, the bank will look into the customer's payment history and creditworthiness.
In this way, a credit card holder can increase the credit card limit on their respective cards. But the cardholder may have to shell out some of the extra annual fees applicable on the credit card for upgradation.