Credit card Update: Banks reduce the credit card limit in many situations. In such a situation, try to maintain a good credit score and also keep an eye on the utilization ratio.
Credit Card Limit: Nowadays, almost everyone uses a credit card. Everyone has an idea of the limit of their credit card, keeping which in mind they make purchases etc. However, sometimes the bank reduces the credit card limit. You are informed about this on your registered mobile number or email. You must be surprised to know why the bank did this suddenly, there are many reasons for this, which we are going to tell you about.
People are not able to repay the loan taken from credit card on time
Often the bank reduces the credit card limit only when the customer delays the payment of the card dues many times. The bank sees them as a risky customer. The bank feels that perhaps you do not have that much money to pay the dues, so it reduces the credit card limit.
A data from TransUnion Cibil has revealed a huge increase in credit card defaults, which has increased from 1.6 percent in March 2023 to 1.8 percent by June 2024.
This increase is usually due to Buy Now, Pay Later (BNPL) schemes or lucrative installments on e-commerce sites. The report also revealed that the amount of credit card dues in India has increased to Rs 2.7 trillion by June 2024, which was Rs 2.6 trillion in March 2024 and Rs 2 trillion in March 2023. This clearly shows that over time, the trend of taking loans from credit cards has increased, which people are failing to pay on time.
Take care of the utilization ratio of the card
The bank will maintain your credit card limit only when your credit score is better. If you repeatedly fail to repay the loan amount, the bank reduces your card limit due to poor credit score.
Also, always try to use only 30% of your credit card limit. When you use 70% or more of your card limit, you enter the risky zone. This is called utilization ratio, which is good only if it is minimal.
Do this when the card limit is reduced
Apart from this, when you start using multiple credit cards simultaneously, the bank starts considering you a risky user. The bank feels that you are more dependent on loans. In such a situation also the bank can reduce the card limit.
However, there is nothing to panic about. If the limit of your credit card is reduced by the bank, then first of all you should call customer care and tell your correct reason why you have missed paying the loan. If you want, you can again request the bank to increase the card limit and also keep in mind those mistakes due to which the card limit can be reduced.
