The credit card helps the customers spend money in the current month and pay the bills in the subsequent months. Credit cards help shop for high-value goods, avail discounts and offers, and utilize credit card points for some other offers. The customer can also use the easy EMI option for credit card bill payments. The credit card companies are like VISA, MASTERCARD, AMERICAN EXPRESS, DINERS CLUB & MAESTRO.etc. These companies play as a medium between the banks and the customers for the credit and debit cards. Banks charge a merchant deduction rate to the merchants of roughly 2% of the transaction value. The credit cards are mostly being allotted to high-value customers who maintain a hefty bank balance. The minimum eligibility criterion in the salary is Rs.15K-20,000 per month, depending on the banks. The bank also requires a good CIBIL score while approving the loans. The bank does not provide credit cards to customers who have a poor credit score; as such, customers can be possibly defaulters. The bank provides a statement of records to the customer every month, either digitally through email or post.
The banks try to provide maximum credit limits to the customers as far as possible. But it depends upon the customer’s salary, the amount the borrower maintains in a bank account, and the customer’s credit score. The banks may reject the customers who cannot provide proper documentation, or else the applicant customer is a defaulter of loans or credit cards. The credit card spending limit starts from Rs.25,000, which may go up to Rs.5-10 lakhs. Also, international debit cards can be used anywhere across the world. The cards are usually categorized as silver, gold, diamond & platinum cards. Each different type of card has different credit limits and also the other benefits in case of redemption. The credit card bills can be paid online through net banking or the cheque or cash in the bank branch. Some banks may restrict or else overcharge the customer in case of cash payment. The banks may charge a hefty penalty if the customer delays the payment of credit card bills, and the credit score may be affected. Thus it is necessary that the customer should pay the credit card bills on time to avoid the credit score.
Following are the reasons based on which the credit limit is decided
Average bank balance maintained by the customer
The customer maintains an average monthly bank balance of more than Rs.25,000 or else Rs.50,000; then, in that case, the customer can get a higher credit limit. In case of maintaining an even high & hefty bank balance, the customer can avail an even better credit limit.
A credit score of the customer
The credit score is maintained above 700 points; then, in that case, the customer can expect a good credit limit as the bank becomes confident that the customer is honest. Thus, there is a low risk of extending the higher credit limit to the customer.
Salary of the customer
The minimum salary of the customer should be Rs.15k-20K, depending on the different banks. The customers who draw a handsome salary of 6 digits can avail higher credits on the credit card in multiple lacks. A higher credit limit helps spend more by the customer.
Eligibility based on the debt of the applicant
If the customer is already running into debt, then, in that case, either a lower credit limit is extended, or else no credit limit is extended to the customer. Thus the existing debt plays an important role in the approval of the credit limit of the customer.
Type of card allotted
There are majorly four types of cards being allotted like silver, gold, diamond & platinum. Different cards have different credit limits and benefits on the reward points being assigned. Thus on the type of card also the credit limit is dependent.
Hence, the customer must maintain a hefty bank balance and a good credit score to avail the maximum benefit of the credit extended by the bank. The customer can even put their capping to limit the spending on the card.