In this world of limitless possibilities, is your credit card limit stealing your every chance to experience life? Whether it is buying that expensive souvenir while on vacation, or availing that limited time offer at your favourite shop. Are you constantly worried about crossing your credit card limit? Perhaps, a credit card limit increase can put your anxiety to rest and allow you to get more from life.

But before anything else, what is a credit card limit?

Unlike the joys of life, credit cards have a spending limit. So, a credit card limit is that amount which you can spend without having to pay the penalty during each credit cycle. The issuing bank fixes a credit limit on your card, and it usually varies from user to user.

There are many factors that contribute towards determining your credit card limit. Some of these include the type of credit card, your income, your ability to repay the dues, your credit score, your previous payment history as well as the present financial obligations. In short, your complete credit history is thoroughly scrutinized to set this spending limit.

Needless to say, you are not allowed to exceed the spending limit set on your credit card. Once you have hit this maximum limit mark, your credit card issuer has the authority to decline all your future transactions. Worse, you could be charged a penalty for using your credit card after exhausting the maximum spending limit. And that would be a complete dampener to your financial peace. Apart from these, the credit limit on your card also impacts your credit score.

But there is little reason to worry, as with just one smart decision, you can overcome all these problems. And that is, getting yourself a credit card limit increase. Find out how to increase the credit card limit, especially, if you have any considerable forthcoming expenses.

How to increase the credit card limit on your credit card?

Credit cards allow you to do so much more with your life. With a simple swipe, you can do away with the monetary stress and get the much-wanted lifestyle upgrade.

So, here’s how to get the most of your credit card by increasing your credit limit.

Max it out

Develop the habit of using your credit card regularly for your transactions. This helps build a pattern in the system of the credit card issuer, where timely payments and constant use of the card gets registered, creating a good impression. This activity also helps in getting a good score. Once this happens, the bank will consider your case for a credit limit escalation at their end.

Take it slow

One can always request the bank for an increase in the credit limit, backed by a strong reason. But the credit limit can also be increased without this request. Issuing banks always study the pattern of credit card usage and payments. So, one of the convenient ways to increase credit card limit is to lie low and allow the banks to do so automatically. They will do this once they feel you are eligible for a rise in your credit limit after having assessed your periodic accounts.

Avoid unrealistic expectations

Issuing banks are always vigilant about their customers’ request for an increase in credit limit. Avoid being desperate as that can quickly put you under the bank’s radar and the chances of your credit card limit increase can become bleak. Also, holding unrealistic expectations for a credit limit increase like twice or thrice the amount can leave you disappointed.

Juggle it through

In case you hold multiple credit cards, you can opt to shift your credit card limit to another one. Choose the card to which the limit needs to be transferred and then go for it. However, this is applicable only if your cards have been issued by the same bank. Also, it's advisable to not discard the remaining credit cards immediately as it could reflect poorly on your credit score.

New credit card

Another way to get through this requirement is to get yourself a new credit card which has a higher credit limit than your current credit limit.

Difference between Total Credit Limit and the Available Credit Limit?

Available credit limit is different from the credit limit, also commonly referred to as the total credit limit on your card. It implies the amount which is left for the credit card holder to utilise after the amount for purchases and interest charged thereof has been deducted from the total credit limit. However, the available limit on your credit card fluctuates once the credit card holder makes the payments towards the principal amount and the interest.

Benefits of Increasing the Credit Limit on Your Card

There are quite a few benefits of increasing the expense limit of credit cards. The limit of credit card, which is set by the issuer, can be raised upon your request or over a period of close examination of your accounts and payments. However, if you are in two minds about taking this step, these factors might help you make the correct choice.

Enhances your credit score

Increasing the limit of credit card can have a positive effect on your credit score, provided your expenses don’t escalate. Financial institutions consider such cardholders more stable as they are not overspending and don’t have heavy debt attached to their name.

Nullifies the need of multiple credit cards

A good credit card with a high credit limit saves you from having multiple credit cards where additional charges and annual fees are levied. Multiple credit cards can be damaging if not managed correctly. When your credit card limit increases but expenses stay stable, you are able to cut down on your expenses on other cards and create a good credit score for yourself.

Low credit utilization

Eat the pie of having a good ranking and strong financial foothold with low credit utilization ratio on your credit card limit increase. Simply put, it means - if your initial credit limit is Rs. 10,000/- and you spend Rs. 5000/- then you are using 50% of your credit limit. But if you increase your credit limit to Rs. 25,000 and still spend Rs. 5000, your credit utilization ratio goes down, giving you an upper hand for a better credit score.

Avail loans with an ease

The credit history and good credit score are essential factors for you to acquire loans.

Emergency fund

The high credit limit is a befitting emergency fund incase of a health or monetary exigency.

Earn more rewards

When the limit of credit card is increased by the bank they consider you to be a valuable customer, and moreover, if you have a strong track record of timely payments, the bank does give you rewards for being a diligent customer.

However, it's crucial to take note of your spending habits. If you are someone who tends to rely majorly on credit cards to meet your needs and other demands, it's best suggested to steer clear from high limit credit cards, as you could get trapped in debt. But if you are someone who is extremely particular about clearing the dues and don’t have extreme expenditures, increasing your credit card limit can have many upsides for you.

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Frequently Asked Questions

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What is the average credit card limit?

The average credit card limit is decided based on multiple factors.

Usually, 2.5 to 3 times of your gross salary is fixed as the credit limit for your credit card.
Kotak Mahindra Bank offers you the 811 #DreamDifferent Credit Card against a fixed deposit. The credit limit on this card is upto 80% of your fixed deposit amount. It is among the maximum credit card limits in India.

How can I increase my credit limit?

You can either request the bank for a credit limit increase or the bank may offer it to you upon assessing your credit history. 

If you are a defaulter or have a high credit utilization ratio, the bank may not increase your credit limit. So, maintaining a good credit score and credit history is your best bet to be considered for credit limit increase.

What happens if I exceed my credit limit?

If you exceed your credit limit, you are entitled to pay an overlimit fee which is charged by the bank as the penalty for superseding the credit limit assigned to you. 

It can reflect poorly on your credit score. Which is why it is always better to be mindful about your credit limit and make expenditures accordingly.

How long does it take to increase the credit limit on my card?

If all your documents and records are clear, then your request may be accepted in a few days’ time.

Sometimes, it may take longer if there are any problems with your credit history.
At Kotak Mahindra Bank, you can apply for a credit limit increase after 6 months from your previous request.

Does an increase in my credit limit affect my CIBIL score?

An increase in the credit limit only reflects positively on your CIBIL score,

provided you don’t end up over-spending through the credit card at your disposal. Which means, a low credit utilization ratio is the only way an increased credit limit can aid your CIBIL score. Spending the funds frivolously can douse a good credit score.

Why was my credit limit increase request denied?

Some of the common reasons why your credit limit increase request does not go through are poor credit score and credit history,

high credit utilization ratio and defaulting in credit repayment. Apart from that, you may have recently been considered for an upgrade, and so a repeat request is denied.

Should I reduce my credit card limit?

Although it is possible to have your credit card limit reduced,

it is not advisable to do so. Reducing your credit limit can hurt your credit score. The best way to manage your credit card repayments is to keep your usage in check.

How do I become eligible for a Credit Limit Increase (CLI)?

Credit limit increase eligibility is evaluated considering different factors.

Use your credit card regularly while maintaining a good repayment history. Apart from this, a good credit score can also help you get a credit limit increase.