Customers who apply for credit cards for the first time and are “new to credit” may be given credit limits that are extremely low.
If the credit card issuer believes you will be able to pay off all of your bills in full and gradually improve your income, they may raise your credit limit when you first use the card. Despite their desire, many HDFC Credit card users are discouraged from taking advantage of larger credit limits because doing so can cause them to get more caught up in a debt cycle. These credit cards are unaware that excessive spending leads to debt buildup more so than having a lower credit limit.
Therefore, we’ll go over the four advantages of increasing your HDFC Indianoil credit card limit in this article.
Your credit score is worth more post increase in limit
Your credit utilisation ratio (CUR) is the proportion of your overall credit limit that has been utilised up to that time. This percentage is taken into account by credit reporting agencies when calculating your credit score. If you exceed this threshold, credit rating agencies will lower your credit score since lenders often perceive applicants with a credit utilisation rate (CUR) of more than 30% as credit-hungry and hence more likely to default. As a result, it is suggested that you frequently check your credit score. Make sure that your credit card usage stays below 30% of your overall credit limit since it becomes more crucial over time for establishing or raising your credit score.
If they accept offers from their current card issuer(s), those who frequently exceed this limit may keep their CUR at 30% of the objective. If your current credit card company won’t increase your HDFC Credit card limit, apply as soon as you can for additional credit cards from a different credit card issuer. If you do not ultimately raise your credit card spending as a result of having access to a bigger credit limit, you will also see a decline in your CUR.
Improved ability to adjust money to unplanned events
Having a bigger credit limit may be beneficial when you are having financial problems or need emergency cash due to unanticipated events like job loss, serious sickness, or disability, among other things.
You can fill up any gaps in your financial resources while maintaining your financial flexibility and avoiding the time-consuming procedure of qualifying for a new loan by using your credit card to pay for unplanned expenses. A cardholder may convert all or a portion of their credit card balance into a monthly installment payment plan if they are unable to pay their bill in full by the next due date. HDFC Indianoil credit card EMI conversions occasionally have tenures ranging from six to sixty months instead of being burdened with costly financing costs, which are frequently between 21 and 48 percent per year if the loan is not paid in full at the time of conversion. Therefore, depending on their ability to do so, cardholders can easily pay off their debt over time in manageable payments.
You can obtain more credit by taking out a credit card loan when needed
The higher your credit limit is, the higher loan against credit card you can be allowed.
Because these loans are frequently sanctioned against the credit limit of the credit card holder, you can borrow more money overall. Since they are pre-approved, loans against credit cards are only accessible to a small set of HDFC Credit card users who have a history of responsible repayment and spending. Due to the fact that loans are typically approved the same day as applications, credit card holders can utilise them as a fantastic tool to deal with financial emergencies and gaps.
After applying, check the status of your loan to stay informed about the situation and to have an estimate of when you might anticipate receiving payment.
The credit limit that was first decreased when you took out this loan is gradually restored when you pay off your credit card loan EMIs. Credit card loans are frequently issued for six to sixty months and have interest rates that are significantly higher than personal loans supplied to the same cardholder over the same time period by the same card issuer. Keep in mind that some HDFC Indianoil credit card providers may also provide a particular type of credit card loan where the loan amount is more than and equal to the credit limit, allowing you to maintain a free credit limit for your normal outlays.
A growing trend of using EMIs to pay for pricey items
Currently, EMIs are one of the most popular benefits of credit cards.For purchases made through specific credit card issuers, many producers and retailers now offer revolving credit that is interest-free. Most of these producers and sellers also work with credit card providers to offer no-cost EMI plans, under which the producer or seller covers all EMI interest costs and the cardholder is only required to pay the purchase price in EMIs and any applicable GST levied on that interest cost to the credit card provider.
Some shops or manufacturers may offer additional discounts or cash back to customers who choose free EMI on specific products or services, significantly lowering the cost of the transaction. When your credit limit is increased, your capacity to use merchant EMI choices to purchase more goods and services will increase, providing you more purchasing power. Since unpaid HDFC Credit card EMIs could result in your credit limit being suspended until they are fully paid, increasing your credit limit will allow you to spend more on your normal credit card purchases while keeping your credit limit open. You can occasionally check your credit limit by logging onto the app or online banking.
Last but not the least, remember to shun away any credit card misconceptions you may have, not just regarding credit card limit but also other habits and factors. Carelessly using credit cards can not only burn a deep hole in your pocket but also damage your credit score too!