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HomeNEWSHow is the credit card limit determined?

How is the credit card limit determined?

Do you know the criteria that define the credit card limit? We know that it is used a lot by thousands of people, and that purchases made cannot exceed the credit card limit, but few know how this limit is defined.

So, let’s clear up some credit card-related questions now: How is the limit set? What can I do to increase the limit? In addition, we will give you some tips on how to make the most of your card limit.

What this article covers:

How is a credit card limit determined?

Several things are taken into account when setting the credit card limit. Things like your current income, your profile as a consumer and your entire financial history are analyzed.

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By analyzing all this data, the bank then decides what its current payment capacity is, and thus defines its limit. Consumers who have a poor payment history are often given a lower limit initially.

What are the consequences of exceeding the credit card limit?

It is usually not possible to make a purchase that is over your credit card limit. Purchases that exceed the limit are declined in most cases, but there are exceptions.

Some banks even allow the customer to make a purchase above the limit, but this purchase must be paid with interest. There are also banks that give a minimum period for the customer to pay the exceeded amount, without interest.

How to increase credit card limit?

These days, it’s much easier to ask for a limit increase. You can do this through an application, or by contacting the bank by phone.

After asking for a credit card limit, the bank will assess whether you are really able to afford your card expenses, and then give you a higher limit. But what if you already have a high limit and for some reason want to lower your credit card limit?

How to decrease?

Just as it can increase, it is also possible to decrease the credit card limit. Currently, it is very simple to do this, just download the bank application responsible for managing your card, and lower the limit. If you prefer, you can also call or go to the bank in person and request the reduction.

Does paying the bill in installments compromise the credit card limit?

The truth is that paying the bill in installments is never a good idea and can compromise your credit card limit. The interest rates are very high and increase more and more with each new invoice.

Installing the bill compromises the credit card limit

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When you realize it, you’ll have already paid much more than you owed, and the debt still won’t be paid. Therefore, paying your credit card bill in installments is something that should be avoided as much as possible, for the sake of your financial health.

Tips on using your credit card limit

A fundamental thing to do is to control spending with the card well, to avoid unnecessary expenses. Analyze well if you really need a certain product before buying it.

If you are going to make an expensive purchase, make a plan and see if you really can afford to pay for that product. Another good idea is to always keep an eye on all the purchases you make with the card, so you can see where you are spending more money and can cut some unnecessary expenses.

It is also important to remember that the credit cards have very high interest rates, so the best thing to do is to use it only when really necessary. If you think about it and follow the other tips, the credit card can be of great help to you.

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