If a “new to credit” applicant applies for a credit card for the first time, the credit card provider will normally give them a relatively modest credit limit.
The credit limits of existing cards will be increased if the issuer has faith in the cardholder’s ability to make timely payments and has noticed an increase in income over time, which may be verified by monitoring the application’s progress and making cash withdrawals with the card. Many HDFC credit card users are discouraged from taking advantage of higher credit limits, despite their desire, because doing so could lead to them becoming more deeply involved in a debt cycle. Contrary to what many credit cards suggest, the tendency to spend more money than one can afford to repay is what keeps people in debt, not having a greater credit limit.
So, in this article we’ll go through the numerous benefits of raising your credit card limit on request or if offered by the issuer.
Your credit score gets better
The percentage of your overall credit limit that has been used up to that point is known as your credit utilisation ratio (CUR). Credit reporting organisations factor in this proportion when determining your credit score. Credit bureaus will decrease your credit score if you go above this limit since lenders often view applicants with a CUR over 30% as credit-hungry and therefore more likely to default. As you would after requesting a HDFC lifetime credit card, make sure to regularly check your credit score. As it becomes increasingly important over time for establishing or improving your credit score, make sure that your credit card utilisation stays below 30% of your total credit limit.
In order to keep their CUR within 30% of the goal, people who frequently go over this limit may choose to apply for a larger credit limit or accept offers from their present card issuer(s) to raise their credit card limits. Apply as soon as you can for new credit cards from a different credit card issuer if your existing credit card provider won’t raise your HDFC credit card limit (or limits). You will also notice a drop in your CUR if you do not ultimately increase your credit card expenditure as a result of having access to a higher credit limit.
Enhanced capacity to adapt finances to unforeseen events
If you are having financial difficulties or require emergency cash due to unplanned occurrences like job loss, severe illness, or disability, among other things, a greater credit limit may be helpful.
If your credit limit is larger, you can also use your HDFC lifetime credit card to pay for unforeseen bills to fill in any financial gaps. You won’t need to continuously apply for credit cards, go through the time-consuming application process, and verify the status of your application because doing so will keep your finances flexible. A cardholder may convert all or a portion of their account balance into an EMI payment plan if they are unable to pay off their entire balance before the next due date. Since the duration of credit card EMI conversion terms typically ranges from six to sixty months, cardholders have plenty of time to pay off their debt in affordable monthly payments that are catered to their financial situation without having to pay the high finance costs that would otherwise be incurred if the debt was not paid in full at the time of conversion (typically between 23 and 49 percent per year).
A HDFC credit card loan may be available if more money is needed
Getting a loan against a credit card will enable you to get a larger loan if your credit limit is higher because you won’t need to apply for a new credit card separately.
You can borrow more money altogether because these loans are often sanctioned against the credit limit of the credit card holder. Loans against credit cards are only available to a select group of credit card users who have a history of responsible repayment and spending since they are pre-approved. Because the loan payout typically occurs on the same day as the loan application, credit card users can utilise them as a great tool to handle financial emergencies and gaps.
Check the status of your loan after applying in the same manner that you would check the status of a credit card application in order to stay informed and be able to anticipate when you will receive disbursement.
When you pay off your HDFC credit card loan EMIs, the credit limit that was initially reduced when you took out this loan is progressively restored. Compared to personal loans provided to the same cardholder over the same time period by the same card issuer, HDFC lifetime credit card loans are often granted for six to sixty months and have interest rates that are much higher. Always be aware that certain credit card companies offer a loan option where the loan amount is equal to or greater than the credit limit, maintaining the credit limit for ordinary transactions.
Having more room to go for EMI options to make big purchases
Currently, one popular perk of using a credit card is EMIs. Many producers and retailers now provide revolving credit that is interest-free for transactions made through particular credit card issuers. To offer free EMI solutions, the majority of these manufacturers and retailers also work with credit card companies. The producer or merchant is responsible for paying the EMI interest costs; the cardholder is only needed to pay the credit card issuer the purchase price in EMIs and any relevant GST payable on those interest payments in these contracts.
Customers who select free EMI on particular goods or services may receive additional discounts or cash back from some retailers or manufacturers, drastically reducing the cost of the transaction. Your ability to use merchant EMI options to buy more products and services will improve when your credit limit is raised, giving you greater spending power. By raising your credit limit, you can use a credit card for larger purchases without worrying that it would be restricted until all outstanding credit card EMIs are paid in full. Just like you can always check the status of your HDFC lifetime credit card application after applying, you may occasionally check your credit limit using the app or online banking.