Now a days credit cards are possessed by every one of us. We all shop, dine, travel and all the expenses related to it are taken care by our credit card. Credit cards offer its users credit limit which he/she can use as per their requirement and convenience. Thus credit limit is nothing but the maximum credit amount or the maximum spending limit available on credit card. A credit card user can spend amount using credit card only till the entire credit limit offered to him/her is exhausted. Kindly note that not all credit card offers same credit limit as the credit limit is dependent on multiple factors like:
- Income of the cardholder
- Monthly Liabilities of the cardholder, and
- Repayment ability of the cardholder
Every Bank after scrutinizing the repayment history and the spending behavior of the cardholder offers its loyal customers an opportunity to enhance the credit card limit. Enhancing the credit limit is totally dependent on the choice of the cardholder and there are certain benefits of increasing your credit card limit. So when next time the bank offers you an opportunity to enhance your credit limits consider the following benefits of increasing your credit card limit:
- Higher Credit Score: Credit score is an important aspect while obtaining any kind of loan or credit facility as every financial institution considers the credit score and then decides whether to offer more credit or not. Credit Score is the rating offered to every individual which is dependent on the amount of credit utilized by the person. Thus, every credit card user must have knowledge of credit utilization. The golden rule of credit utilization and maximizing credit score is low utilization of the credit limit of your credit card this is because higher you utilize the credit limit the credit score gets hampered. So if you increase your credit card limit the benefit will be that your credit limit will be increased while your utilization will be less thus it will increase your credit score.
- Access to additional loan is easy: The most important benefit of increasing your credit card limit is that it is easier to get additional credit or loan. The reason being that when you are doing low credit utilization the financial institutions consider you as financial responsible individual thus making you more potential credit customer.
- Best help in Emergency: Emergencies come uninvited and suddenly. You may require financial assistance for emergencies related to health, business or any other. So increasing the credit limit will be beneficial to tackle emergencies as it will rescue you from immediate cash requirement. So if you spend wisely with your credit card and utilize a very less credit limit then the remaining balance of your credit limit of the credit card can be used as contingency fund.
- Say no to Multiple Credit Cards: Many people believe in availing multiple credit cards in order to increase their credit score which is correct but rather than going for a new credit card and shortening the length of your credit history it is beneficial to opt for enhancing credit limit on your existing credit card.
Thus, in this manner you can enjoy the benefits of increased credit card limit and high credit score that too without any additional charge as banks offer enhanced credit limit for free.