Credit Card Limit: Banks/card companies also reduce the credit card limit under certain circumstances. Let us know what are the circumstances when your credit card limit can be reduced.
New Delhi. If you also use a credit card, then you must know that there is a credit card limit. Sometimes banks / companies increase the credit card limit due to your spending pattern and timely repayment. However, banks / card companies also reduce the credit card limit in certain circumstances. Let us know what are those situations when your credit card limit can be reduced.
On payment default
If you delay paying your credit card bill many times, then the bank can keep an eye on you further. The bank sees it in such a way that you do not have money to pay the credit card bill. In such a situation, the bank reduces your credit limit.
On paying the minimum due
In the credit card, you get the option of carry forward to transfer your outstanding amount to the next month’s bill. Many people carry forward the outstanding amount to the next month by paying the minimum due of the credit card. If you do this repeatedly then the company can reduce your credit card limit.
In case of high credit utilization ratio (CUR)
The amount you use of your credit card limit is called credit utilization ratio (CUR). If your utilization ratio becomes high, it directly affects your credit score and credit card limit. For example, if you have a credit limit of Rs 3 lakh on your credit card. If you spend Rs 30,000 in this, then your CUR will be 10 percent. For a good credit score, it is always advised that the credit utilization ratio should be kept less than 30 percent.
Very little use of credit card
If you also use your credit card very little like this, then your credit limit can be reduced by the bank. The bank benefits only when you use your card as well as repay it on time.
Economic uncertainty
When the economy is uncertain and most people face financial crisis, many card companies reduce the credit limit for their credit cardholders to reduce the risk. In fact, due to economic uncertainty, there is a high possibility that cardholders will not be able to repay their dues on time in such situations. For example, during the Corona epidemic, many cardholders faced low credit limits.
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