Would you like to change your credit card and get a better deal? What factors can affect the credit card borrowing limit and what credit limit is usually set? We analyze the situation.
The credit limit corresponds to the loan limit of the credit card and simply denotes the maximum amount that can be borrowed before the refund. If this limit is USD 3,000, the cardholder can make purchases or cash withdrawals of up to USD 3,000. As soon as this amount has been reached, the loaned amount must be repaid in full or in part so that the card remains usable.
Why are the cards limited?
Basically, credit cards are limited in most cases as this minimizes the lender’s risk. A non-repaid sum means not only a loss for the lender, but also long and expensive collection processes. Limiting customer spending is the best solution for lenders to prevent losses.
Credit limit depending on the risk
The maximum credit limit is determined by the company that issues the card. Depending on the risk class, the customer is divided into another class:
- A person with a good financial situation (= high income) can easily get a limit of USD 5,000 to 10,000
- A person with a “medium” financial situation often receives a limit of USD 3,000 to USD 5,000
- A person with a lower budget may get a limit of USD 1,500 to USD 2,000
The advantages of a higher limit
Although a higher limit means a greater debt risk, it can also prove to be beneficial in various situations. For example:
- During the holidays : prevents a lack of liquidity
- For expensive purchases : Online purchase of expensive purchases
- In case of problems : As a financial emergency reserve (theft of your wallet, etc.)
How to increase your credit card limit?
There are several ways to do this. The first method is very simple: ask the lender about the loan increase. Normally, an increase in income has to be proven in order to get a positive answer.
The second option is to request a new card from a company that offers a higher credit limit. Good Lenders Credit, for example, offers credit cards with a higher credit limit than the competition, see the credit card range at Good Lenders Credit.
It is also possible to request a temporary increase in the limit by stating the reason. It may well be that your lender increases your limit for a month, for example, for holidays, purchases, etc.