What is a credit card limit?
A credit card limit is the maximum amount of money a bank allows a customer to spend on shopping and personal expenses. Each issuing bank has its own minimum and maximum credit limit. This amount varies for each type of card issued. Even within the same card product, the credit limit can differ for each individual.
Typically, when granting a credit card limit, banks will base their decision on several factors, such as:
- Income: This is a crucial factor determining the credit card limit. During the application process, the bank will require customers to provide proof of their income. The higher and more stable the income, the higher the approved credit limit.
- Employment : When someone has a stable job, banks will see their ability to repay credit in the long term. Therefore, banks always check employment status in credit card application files.
- Credit history: When reviewing a credit application, the bank will check information such as: whether the applicant has too many credit cards, whether they have a habit of paying off debts on time, their spending habits, etc. All this information helps the bank assess the applicant's ability to repay the outstanding credit balance.
If spending exceeds the allocated limit, customers will be charged an overdraft fee by the bank. (Illustrative image)
Is it okay to exceed my credit card limit?
According to current credit card limit policies, setting limits serves both to control and regulate the amount of money used by banks and to foster the habit of "spending only what you have." However, there are still some cases where banks allow users to exceed their credit limit. The amount exceeded will depend on the regulations of each bank.
To be eligible to exceed the approved credit limit, credit cards must have a high level of credibility and trustworthiness in terms of usage and payment history.
The credit limit is granted by the bank immediately after opening the card, and the cardholder is only allowed to spend within this limit. If spending exceeds the credit card limit, the customer must pay an overdraft fee.
As spending needs increase over time and the old credit limit is no longer sufficient, cardholders may consider increasing their credit limit.
If you have a good credit history, the bank will automatically increase your credit limit. Alternatively, cardholders can proactively contact the bank to request a limit increase, limit expansion/splitting, or additional credit cards.
However, to have their credit limit increased by the bank, customers must meet certain criteria set by the banks, such as increased income, consistently paying off credit card balances on time, minimizing early credit card cancellations, and making frequent purchases using the card to improve their credit score and history.
Lagerstroemia (compilation)
Source
Comment (0)