How and Why to Request a Credit Limit Increase?

The credit card limit is the maximum amount that you, as a cardholder, can borrow and spend with your credit card. Every financial institution pre-sets a limit whenever they allocate a new card. It depends on various factors, like your income, credit score, economic history, etc.

Lenders periodically revise a borrower’s credit limit. You can also request for a credit card limit increase to your lender to guarantee a hike in the maximum spendable amount. A higher credit limit will allow you to utilise your credit card in a much better way.

How to request for a credit limit increase?

There are two ways in which you can request your lender to increase your credit card limit. You can send an online application, or call their customer care executive to place your request.

Whenever you request credit card limit increase, the lender checks your CIBIL score, previous expenditure records, payment history, current monthly income, and a few other factors to check your creditworthiness. CIBIL score plays a crucial role here. A good rating with no history of a default signifies you are financially responsible. It will vastly increase the chances of your credit card application getting approved.

Also, financial experts advise asking for smaller increments. If you ask for a 25% rise in credit limits, instead of a higher increase of say 50% or more, lenders will be more prone to grant your request.

Why should you request a higher credit limit?

There are various benefits to have a higher credit card limit. Let’s take a look at some of them.

  • Lower credit utilisation – Your credit utilisation ratio will drop when your cards credit limit increases. For instance, if you spend Rs. 50,000 with a card which has a limit of Rs. 1,00,000, you are utilising 50% of its credit limit, which is considerably high. With a higher threshold of say Rs. 1,25,000, you can spend the same amount without reaching the 50% mark.

Your CIBIL score will improve over time if you maintain a lower credit utilisation ratio. Thus, it is a vital reason why you should request credit card limit increase.

  • One card to cover all your expenses – You will be able to use one card to cover all your costs if it has a higher credit limit. It will help you better manage your expenses, schedule expensive purchases and limit unnecessary spending. Also, you will not pay for fees and charges that you would otherwise pay for multiple cards, which will help you save some money in the process.
  • Accumulate more reward points – After you request credit card limit increase and start to use one card for most, or all of your expenses, you will begin to accumulate a lot of reward points on that particular account. Credit cards like the Bajaj Finserv RBL Bank SuperCard offer one reward point on every Rs. 100 spent on ordinary shopping, and two reward points for every Rs. 100 spent on online shopping. If you use this card to pay your bills, purchase goods, or pay for every other expense, you will earn a significant amount of reward points which you can redeem to win gifts, discounts, cash-backs, and even cash.

SuperCard also comes with various other industry-leading benefits, combining the convenience of 4 different types of cards in one. Bajaj Finserv also brings pre-approved offers for credit cards, personal loans, home loans, business loans, and numerous other financial products and services. It saves you time by simplifying the process of availing finances.

You can easily check your pre-approved offer after you provide some necessary details online.

  • Financial help during emergencies – A higher credit limit can help you tackle a crisis with a substantial sum at your disposal. You can also get a significant amount as a personal loan on credit card thanks to the higher limit.

A higher credit limit brings its own set of advantages. After you are associated with a financial institution for a while, you should request for a credit card limit increase and improve your financial profile.