As per RBI, there were around 50.3 million active credit cards in India in July 2019. The sharp rise in the number of credit card users can be accredited to the several benefits and facilities now offered by financers on these cards. For instance, for some credit card users, the substantial credit card limits offered by leading financers compel them to avail new cards.
To elaborate, a credit card comes with a pre-specified credit amount offered by the card issuer for making purchases. For instance, if a credit card comes with a credit limit of Rs.1 lakh, cardholders cannot make transactions or purchases exceeding this limit. In fact, an individual’s credit card limit is determined by keeping into consideration several factors and the applicant’s eligibility.
Factors that determine credit card limit
The following indicates the factors that are taken into consideration –
Applicants’ credit history.
Their existing debt.
Status of employment.
Subsequently, applicants with a regular source of income, healthy CIBIL score, and credit history are more likely to secure a credit card with a substantial credit limit. Conversely, first-time credit card applicants or those without any credit history would be offered a credit card with a comparatively lower limit. This is usually done as a measure against risk on the part of credit card issuers after considering the applicants’ creditworthiness.
Nevertheless, first-time card applicants can opt for options like RBL bank credit cards to make the most of the other offerings that come with such cards. For instance, such cards extend benefits like interest-free cash withdrawal through ATM for up to 50 days. Additionally, card users can avail of emergency credit against their available cash limit as well.
Conversely, it must be noted that credit card limits and available cash limits are not the same. The first is the maximum limit up to which card users can spend using the credit card for online or POS transactions. On the other hand, the available cash limit is the amount of cash that a card user can withdraw with the credit card. Note that the cash limit is part of the total available credit amount.