6 Ways to Increase Your Credit Card Limit

Credit card limit is the maximum amount that you can spend on your card. It is decided by the issuer basis your income, limit on your existing cards, outstanding personal loan EMIs, home loan EMIs, and other internal factors.

As you spend on your card, the limit is reduced by the amount spent and is restored when you pay your credit card bills. For example, if your limit is Rs. 1 Lakh and you make a purchase worth Rs. 30,000, your available credit limit becomes Rs. 70,000. Now, if you pay back Rs. 10,000 towards your outstanding balance, it gets added and your available limit becomes Rs. 80,000.

If you are looking to increase your credit limit, here are the two ways how you can do it:

1. Accept a Pre-Approved Credit Limit Increase Offer

Card issuers review their cardholder profiles periodically and offer pre-approved credit card limit increase to eligible customers. When you become eligible for such an offer, you will likely get an SMS, a WhatsApp communication or an email regarding this. Once you give your consent for the same and the limit will be increased instantly. Pre-approved limit increase offers usually do not require additional documentation but this may vary on case-to-case basis.

2. Request a Credit Limit Increase

If you do not receive any pre-approved limit increase offer, you can also request a credit card limit increase through your bank’s mobile app or net banking portal. While the process can slightly vary for different card providers, here is the usual process for limit increase request:

If you are approved, the increased limit will be added to your card. If not, you will receive an intimation about the same from the bank.

Listed below are some of the most important factors that impact your credit card limit increase:

1. Income

When you request a limit increase, income is one of the first things that banks will check. They may ask you to submit your latest salary slips or bank statements as income proofs. Similarly, for businesses, banks could ask for latest ITR and bank statements. In addition to checking the income, card issuers would also be interested in knowing how stable your income is. If you are getting your salary on the same day every month without fail, this can be a good sign.

2. Credit Score

Another important factor is your credit score, which the card issuers check to assess your creditworthiness. They could also check your credit utilisation ratio to ensure you are responsible with available credit. If you tend to exhaust your entire limit every month, it shows that you are credit hungry, and could make additional limit availability a risk for the bank.

3. Repayment History

Before granting an additional credit limit to you, card issuers would like to know how you are managing your existing credit. This is reflected in your credit report as repayment history. If you have had several missed payments in recent past or if you are able to pay only the minimum amount due, this could signal irresponsible repayment behaviour. In such cases, the bank may refrain from increasing your credit limit.

4. Relationship With the Card Issuer

Your relationship with the bank such as the length of the relationship and overall banking value may also be considered when granting additional limit to cardholders. A tenured relationship is usually in favour of your case when requesting a limit increase.

5. Card Type and Issuer's Internal Policies

Different credit card variants have their internal limits as to how much limit can the bank’s can give on any given variant. So, if you have a basic entry-level credit card, you may not be able to get limit increase after a point. In such cases, the bank may provide you with a card upgrade offer with a higher credit limit. It is important to note that there is no universal credit-limit formula. The issuer determines eligibility based on its own policies and the applicant's profile.

Some of the key benefits of increasing your credit limit are mentioned below:

A higher credit limit does not mean you should increase your spending. The benefit of a higher limit is greatest when you continue to spend within your repayment capacity and pay your bills on time.

When it comes to credit card limit, there is no single formula as to how much limit one should have. The maximum credit limit that you can get depends on a lot of factors including your income, creditworthiness, existing debt, etc.

The type of credit card can also influence the potential credit limit. Premium cards which are generally targeted at customers with higher incomes and stronger credit profiles may offer a higher credit limit than entry-level cards. Banks also have internal capping for each card but they are not shared with consumers. However, the limit assigned to an individual cardholder can vary based on the issuer's assessment of their profile. Card issuers may also have internal credit-limit ranges or caps for different cards.

If you are not able to get a limit increase on your credit card, you can try to get a new credit card for added purchasing power. The table below shows the key differences:

The approval or rejection of a credit card limit increase request depends entirely on the card issuers. Here are some of the common reasons why your credit limit increase could be rejected:

If your credit card limit increase request is rejected, you must review your credit report to identify any errors or outstanding dues and get them corrected or paid off in order to improve your credit score . You can also work on reducing your credit utilisation, update your income details with the card issuer, and maintain a consistent repayment history. Once your credit profile improves, you can consider requesting a limit increase.