If you’ve ever used a credit card in India, you’ll notice that each card comes with a credit limit, which explains the maximum amount you can spend on that card.
Your limit is set based on factors like your income, credit history, and how responsible you’ve been with debt in the past. Someone with strong credit and a steady income may be eligible for a higher limit, while new borrowers or those with past credit issues typically start with a lower limit.
What is a Credit Card Limit?
In simple terms, a credit card limit is the maximum spending amount that your bank allows on your card. For example, if your HDFC Bank credit card has a limit of ₹1,50,000, you can only make purchases or transactions up to that amount.
The limit is not the same for everyone. Banks decide your limit based on:
- Income and profession – Salaried employees with stable income often get higher limits than students or freelancers.
- Credit history – If you repay loans and cards on time, your limit will likely be higher.
- CIBIL score – A good score (750 and above) improves your chances of getting a bigger limit.
- Relationship with the bank – Loyal customers with savings accounts, FDs, or long banking relationships often get a higher credit limit.
Why Your Credit Card Limit Matters?
1. Daily Spending Power
Your credit limit directly affects the amount you can spend each month. A higher limit is useful for flight bookings, online shopping, and emergency purposes. But if your limit is low, you may need to calculate before spending through a credit card.
2. Impact on CIBIL Score
Your credit utilization ratio, or the portion of your credit limit you use, is a key factor in your CIBIL score. For example:
- Card Limit: ₹1,00,000
- Balance Used: ₹40,000
- Utilization: 40%
Experts recommend keeping utilization below 30%. If you regularly max out your card, your score may drop—even if you pay on time.
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3. Loan and EMI Approvals
Banks and NBFCs check your past creditworthiness before approving personal loans, home loans, or EMI-based purchases. If you are aware of your credit limit, you’re more likely to get approvals with lower interest rates.
4. Emergency Backup Plan
In India, medical bills, last-minute travel, or family functions often bring unexpected expenses. A higher limit offers you greater financial security. But remember, this is borrowed money that needs to be repaid on the due date to avoid high interest charges.
5. Over-Limit Charges
Most banks don’t allow you to spend beyond your limit. If they do, you may face over-limit charges (usually 2–3% of the excess amount). For example, if your limit is ₹1,00,000 and you spend ₹1,05,000, you might be charged an additional ₹1500 to ₹2000.
Can You Increase Your Credit Limit in India?
Yes, banks often allow you to request a credit limit increase after a few months of responsible use. There are two ways:
- Automatic Increase: If you consistently pay your dues on time, banks like SBI, ICICI, and HDFC may raise your limit without asking.
- Requesting Manually: You can apply via internet banking or customer care. Banks may check your income proof or run a CIBIL inquiry before approval.
Tip: Never apply for a limit increase too often—it may look like you’re credit-hungry and can negatively impact your score.
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Final Word: Use Your Limit Smartly
Credit Card limit is an important factor that reflects your financial discipline. Managed well, it can:
- Strengthen your CIBIL score.
- Improve chances of loan approvals.
- Give you peace of mind during emergencies.
But if you overspend or misuse it, you could fall into a debt trap due to the high interest rates (36–42% annually).