Everything you need to know about Credit card limit

By Om Chaudhary - 17 Aug 2021 Last Updated: 21 Oct 2021
Everything you need to know about Credit card limit

A credit limit is the maximum amount available on your credit card. The bank determines this purchase limit based on a variety of factors including annual income, current debt, employment status, credit history, credit score, and other considerations. A bigger credit limit is required to boost your purchasing limit.

Thus in this blog we will focus on the information about how to increase your Credit Card limit as well as the benefits of having an increased Credit Card limit. So without any further ado, let’s learn!

What factors do banks consider when determining your Credit Card limit?

Your credit limit is determined by your bank when you apply for a credit card. This is accomplished by considering a variety of factors. These are some of them:

  • Your yearly earnings.
  • Your age.
  • The amount of debt you are holding.
  • The total amount of credit you have in your name.
  • Your current employment situation.

Most crucially, the following factors affect your credit limit:

  • Your credit score and history
  • Your credit rating

If this is your first credit card or you have no credit history, your credit card will most likely have a low credit limit. This is because the bank is undecided about whether or not to take a chance on you.

The good news is that a low credit limit does not stay that way for long. If you use your card frequently and pay your bills in full and on time, the bank may increase your credit limit on your card.

It's possible that your initial credit card will have a lower credit limit. These suggestions will help you improve your credit limit.

Tips to increase your Credit Card Limit

increase your Credit Card Limit

Request a new Credit Card

If you already have a credit card, apply for a new one and request a credit limit increase. Depending on demographics such as population size, age structure, density, and other considerations, individual cards may have their own credit limit cap. Choose a credit card issuer, fill out an application, and receive your new card. You can also reallocate your credit limit to a credit card you wish to use more and cancel the one you don't want to use.

The credit limit on personal credit cards and company credit cards cannot be re-allocated. You can't transfer credit limits across credit cards or charge cards. A charge card is a credit card that does not have any credit limits.

Improve your Credit Score

With a perfect credit score, you have a strong chance of increasing your credit limit. A larger credit limit is associated with a higher credit score. Use no more than 30% of your overall credit limit on your credit cards.

Request for a Credit Limit increase

You can request a credit limit increase from your card issuer. Banks have no qualms about raising your credit limit. They want to know if you are using your credit limit and repaying your debt on schedule. Credit card companies offer the option of requesting a credit limit increase through an online method. You can also phone your credit card company and request a credit limit increase. Gather and preserve your supporting documents, such as paystubs, on hand. You can submit bank requests for verification once they have been received. Inquiries from banks on your credit reports examine your credit report and grant your request.

Don’t ask for much at once

Do not beg for a credit limit increase. You are mistaken if you believe that by telling your storey to your lender, you would be able to persuade them to extend your credit limit. Let the credit card company know that you are deserving of a higher credit limit.

Demonstrate to them that you are deserving of a credit limit increase for the reasons listed below.

  • You've never been late with a payment and have always been a loyal customer.
  • Every month, you have always paid your credit card account in full.
  • You've always been punctual with your payments.
  • Thirty percent or less of your credit card balance was used.
  • You paid more than the minimum balance on your credit card each month.

Do not be arrogant or threaten the credit card issuer, and do not blame the credit card issuer for your financial difficulties. It is an impolite manner of communication, and they will not assist you. Always keep in mind that your credit limits will not be increased until you reach the ideal credit score.

Tips to increase your Credit Card Limit

Being greedy can work against you

Don't be greedy and ask for too much credit. If you ask for too much of a credit limit increase, it's a red sign. If you're raising this red flag, there's a reason for it. You will be flatly refused a credit limit increase. Reapplying for a credit limit increase will take a few more months.

Do not inquire about the amount that will be increased on your credit card with credit card companies. You will not receive this information from your credit card issuer.

Transferring a balance from one Credit Card to another

A balance transfer is when you transfer your balance from one credit card to another. Many credit card companies offer 0 percent interest on transfers for a set period of time.

The bank will offer you with an interest-free period if you transfer your balance from Card X to Card Y. You can save money by transferring your credit card and increasing your credit limit on that card. This gives you the option of increasing your credit card usage on that specific card.

Reduce the number of Accounts you have

Reduce the amount of credit card accounts with outstanding balances that you have with various lenders. When assessing your application, the credit card company checks into all of your accounts. Unpaid balances on various credit cards can indicate financial difficulty. Banks will examine not only your credit ratings but also how you maintain your credit card accounts while examining your application.

The following are some other general suggestions for increasing your Credit Card limits:

  • If you use your credit card to pay your expenses on a regular basis and repay on time, your credit limit will be automatically increased by the bank.
  • Contact your bank with paystubs and a request for a credit card upgrade after your salary has increased. You can also ask for a credit limit increase.
  • You can seek an increase in your credit limit online or in person at a bank office. Banks may increase your credit limit based on your transaction history.
  • Fill out the application form completely and accurately. Credit limitations will be increased by the credit card company. Remember that the bank will request proofs and perform the verification.

Benefits of having a higher Credit Card limit in United Arab Emirates

You may already be aware of some of the advantages of increasing your credit limit on your card, but they are listed here so that you are aware of how an increase in your card's credit limit can benefit you.

Benefits of having a higher Credit Card limit

Access to additional benefits

Most credit cards with a high credit limit also come with a slew of amenities, such as access to airport lounges, hotel membership, and so on.

Easier to get loans

Banks and lenders will see you more favorably if you have a large credit limit that you do not use. As a result, receiving a loan approval becomes a lot easier.

Credit Utilization Ratio is lowered

You're undoubtedly aware of this. The significance of maintaining a low credit usage ratio, on the other hand, cannot be overstated. Your CIBIL score improves as the ratio decreases.

Aids in emergency situations

A bigger credit limit is usually useful in a financial or medical emergency.

Conclusion

When it comes to increasing your credit limit, there are no hard and fast regulations. Users with a solid credit history are given a higher credit limit than they think. As a result, credit card limits can only be increased with a high credit score and a long credit history. Thus we hope this blog provided you with incite full information. For more information on other related aspects, feel free to check out our Website as well.

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Credit Card Related FAQ

Frequently Asked Questions

  • How to Apply for a Credit Card?

    You can apply for credit card online by visiting Dhanguard and selecting type of credit card as per your requirement. We will further assist you with the process and requirement as per your requirements.

  • What is the eligibility Criteria for Credit Card in UAE?

    According to the UAE Central Bank regulations, any individual should earn a minimum salary of AED 5,000 per month to be considered eligible for credit card. Also, the Debt Burden Ratio of the consumer should not exceed 50%, to be eligible for a credit card.

  • What is the late fees applicable on late payment for Credit Card?

    Late payment fees are charged by banks if the minimum payment due on a credit card is not received on or before the payment due date. It vary from bank to bank but is generally about AED 250 per month.

  • What is Sharia Compliant Credit Card?

    As per the Shariah law, some banks in the UAE offers Shariah Compliant Credit Cards. This type of Islamic credit card stringently follows shariah principles that charges profit rate instead of interest rate as Riba is sternly prohibited as per the Islamic law. Though, Shariah Islamic credit card works similarly like a traditional credit card but with minor difference in the offered benefits.

  • What are the features of Credit Card?

    The credit card has a fixed credit limit, grace period, annual percentage rate, annual fees and bifurcation in offered benefits.

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