Having a credit card for yourself sounds all great as you have constant availability of funds. Additionally, there are monetary benefits that come with credit cards, which can be extremely beneficial.
However, with great tools comes greater risk. And it is not at all different from credit cards. Using your credit card carelessly and bringing in unwanted purchases may lead to a severe situation. While it depends on one person and their skills to manage tools, lenders have introduced credit limits on these cards to save you from irresponsible spending to a certain extent.
It is basically what the name suggests. There is a certain credit limit on your credit card up to which you may spend. In this blog, we will look at the role of credit card limits in your financial planning.
Why does a credit limit matter?
Before you go on and start looking at how to increase credit card limits, let us take a look at why credit limits matter. A large part of your credit score is determined based on how much of the total credit you utilise, which means the limits or balances on all of your cards are considered to calculate the score. If you have a good credit score, it may affect your ability to get financing on things like a car or home. You can even start a business and get specific types of jobs.
It goes without saying that it is always considered a good idea to keep the credit card balance as low as possible concerning the credit limit. Certainly, paying the balance every month in full each month is the best practice. If you cannot do so, consider paying as much over the minimum as possible so you may take the important step towards the right path.
What If You Exceed The Credit Limit?
If you take the initiative to have too many charges on your credit card, there might be bad impacts, leading to severe issues. The lenders of credit cards can assess overcharge fees, close your account, or even decrease your credit limit if you think you have exceeded the credit limit. Lenders can also take the initiative to increase the interest rate if your credit history shows you frequently surpass the credit limit. If this is the case, there might be a negative impact on your credit score. Therefore, it is a must that you closely monitor the charges on your credit card.
Better Management Of Your Finances
With the best credit card in India, known as IDFC FIRST Bank credit card, and the credit limit in place, you are set to have better management of your finances. It also helps you stay within your lane and refrains you from overspending. You would be pleased to know that many online tracking applications help you stay on track with your expenses.
Wrapping Up
You may wish to indulge in dining, shopping, and entertainment from time to time. But the key is to spend wisely. With a limit on credit card payment in place, you can be assured that extra eyes are monitoring your expenses.