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Now, here comes one simple question. Is having a high credit limit better?
Well, in majority of cases the answer is Yes! However, when it comes to deciding the credit limit, like how much credit limit is enough for you basically depends on plenty of factors such as how you use your card, what is your income, how many cards you own and many more.
More to the point, on one thing many of you will surely agree is the fact that many people believe that having a high credit limit is definitely a status symbol. Furthermore, this may or may not be the case, but having a credit card with high limit is surely beneficial for you as it provides you with plenty of advantages. But, before going any further, let’s understand what credit limit is?
What Credit Limit Stands For?
Credit limit basically stands for the maximum amount that you can borrow from a bank via using your credit card. Moreover, your credit card company sets a significant limit on your card which you can use for varied purposes. However, depending upon plenty of significant factors, banks can increase or decrease your limit from time to time. Yes, these factors such as your repayment record, CIBIL Score, Income, Card Usage and many more are the deciding factors that play a crucial role in increasing or decreasing your credit limit.
Now let’s focus on the benefits of having the high credit limit:
Possibility of Higher Loans
Yes, one of the biggest benefits associated with having a credit card of high credit limit is to get the loans for higher amounts. It’s easy for you to get various kinds of loans so easily and that too at lowest interest rates. Without any hassle, you can easily get any kind of loan, and that too with minimum formalities.
Lower Debt to Credit Ratio
When it comes to debt to credit ratio which is also known as credit utilization is one of those factors that create a direct impact on your credit score. Yes, these two factors are inversely related to each other, i.e. the lower your credit utilization is, the better it is for your CIBIL score.
More to the point, if you increase your credit limit, it actually helps you in improving your credit utilization, but remember it is only possible if you use your credit card very judiciously, and pay all your bills on time.
Benefits for Financial Emergency
Whenever you have a financial emergency such as marriage, medical expenses, travel and so on, an increased credit limit allows you to borrow a large amount at any time. Yes, with a high credit limit, you can easily fulfill your varied, whenever you are in urgent need of money.
Maximum Rewards, Discounts & Cash Back
It is quite obvious that if a credit card has high limit, it will definitely provide you maximum rewards and cash backs. Whether you use your card for dining, shopping or travelling, a high credit limit allows you to avail maximum discounts and lucrative deals on every purchase of yours.
Revoke the Need of Multiple Cards
If you are having the credit card of high credit limit, it’s quite evident that you don’t need other credit cards. Only one credit card with high limit can easily cater to your needs, hence there is no use of carrying different cards. Not only this, it would be easy for you to manage one card, instead of multiple credit cards.