What Is the Limit of Credit Cards? Can I Use 100% of My Credit Card Limit?

Posted on Thursday, August 24th, 2023 | By IndusInd Bank

Credit limit refers to the maximum amount of money a credit card issuer allows you to borrow. Using 100% of your credit card limit may negatively affect your credit score and financial stability.

Credit card usage has increased dramatically in India over the past few years. Credit cards have completely changed how we shop, pay bills, and handle our finances. A credit card enhances your ability to make purchases and earn valuable rewards. However, using a credit card necessitates responsibility and understanding its limitations, just like with any other financial tool. This blog post will explore the subject of credit card limit and how to use credit cards to your advantage.

What Is Credit Card Limit?

The credit limit is the maximum amount of money a lender allows you to borrow on a credit card. Your ability to use the card for further transactions is temporarily restricted if you reach the maximum credit limit. You are subsequently required to clear those outstanding dues before making any further transactions using your credit card.

How Is Credit Limit Determined?

The bank determines your credit limit by considering several factors, including:

• Your income
• Repayment History
• Credit Score
• Liabilities

When you first apply for a credit card, your credit limit will probably be lesser. However, if you use your card responsibly and make repayments on time and in full, you may request the bank to increase your credit limit.

Can You Use 100% of Your Credit Card Limit?

While it is permissible to use 100% of your credit card limit, it is not recommended. Maxing out your credit card can adversely impact your credit score, limiting future borrowing options. Moreover, a high outstanding balance incurs substantial interest, putting you at risk of falling into debt. Maintaining a low credit utilisation ratio, ideally around 30%, will help you maintain a healthy financial profile and avoid unnecessary debt.

How To Increase Your Credit Card Limit?

Here are some effective tips to increase your credit card limit:

1. Use your credit card for everyday expenses. Active card usage demonstrates responsible financial behaviour and increases your chances of obtaining a higher credit limit.
2. Pay your credit card bills on time to maintain a healthy credit history. Avoid making minimum or late payments, which could lead to accrual of interest and penalties.
3. Only use a small portion of your available credit. Keeping your credit utilisation ratio below 30% indicates you can manage your finances well.
4. Don’t hesitate to request your bank for a credit card limit increase. Update your income and financial information to strengthen your application.
5. Consider applying for a credit card with a higher limit than your existing card.

Why Should You Apply for a New Credit Card with IndusInd Bank?

Looking for a credit card with a good credit card limit in India? Apply for a credit card with IndusInd Bank. IndusInd Bank provides several credit cards with zero joining and annual fees. Accessible to all, the application process is hassle-free and 100% online with instant approval. Additionally, you can earn reward points with every transaction you make using your credit card. And the best part is that these reward points never expire! You can redeem them for cash credit to pay your credit dues anytime you like.

IndusInd Bank credit cards also come with a waiver on fuel surcharge. And that’s not all. You can travel in style with complimentary access to airport lounges at various domestic and international airports. Also, you can indulge in exclusive memberships and discounts on dining, travel, shopping, entertainment and much more.

Indulge in a world of benefits with an IndusInd Bank credit card. Apply today!

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.