Is Credit Card Limit Based on Income?

Is Credit Card Limit Based on Income?, What is credit card?, Does credit card limit depend on salary?, What determines credit card limit?, Can I increase my credit card limit?, Can I get credit card with salary less than Rs 10,000?

Yes, the credit card limit is initially based on the income you have submitted in the application form. However, you can approach the bank, later on, to increase the credit limit. The bank will assess your latest increased income before increasing your credit limit. 

What is credit card?

A credit card is a credit facility provided by the bank. It allows the customers to borrow the funds within a preapproved credit limit. It also enables the customers to do the transaction of purchase of goods and services. The credit card information incorporates the credit card number, the name of the card holder, signature, CVC number, expiration date, etc. 

Whenever the cardholder swipes the credit card, the amount gets deducted from the credit card limit and not the bank account. The credit card can be utilized to pay for food, clothes, travel expenses, medical expenses, lifestyle products, emergency services, etc.

Does credit card limit depend on salary?

Yes, credit card limit largely depend on your salary because it is an indication that you are earning a fixed income regularly. This means the chances of getting default in the credit card payment will be less. So there are high chances of getting a higher credit limit. 

What determines credit card limit?

There are five major factors that determines your credit card limit

1. Your income or salary

The credit limit is usually twice or thrice your monthly income or salary. For example, if your salary is Rs 50,000, then the credit limit can be expected to be Rs 1,00,000 or Rs 1,50,000. 

2. Your CIBIL score

The civil score should be above 750. Lower score will reduce the limit even if your income is high. The score is determined by the frequency of payment of loan or credit card.

3. Your portfolio with the bank

This will include liquid assets like the balance maintained in the saving account, the amount maintained in fixed deposits or recurring deposits, the insurance plan taken from the same bank, etc. In all these cases you are likely to get a higher credit limit even if you are salary or income is less.

4. Hard inquiries with other banks

If you place request for credit cards or loans in five banks in a small time, say one month, will decrease your CIBIL score.

5. Ongoing loans or EMIs

A large portion of your monthly income paid towards ongoing loans or EMIs is likely to affect your CIBIL score and reduce the chances of getting a higher credit limit. For example, if your monthly salary is Rs 50,000 and you pay around Rs 30,000 towards loans and EMIs then there are chances that your CIBIL score will decrease drastically. 

Can I increase my credit card limit?

Yes, you can increase your credit limit if you regularly pay your credit card bills or EMIs without any default. If your monthly income increases, then also you can submit your latest income statement to the credit card issuer. 

Can I get credit card with salary less than Rs 10,000?

If you do not qualify for a credit card then you can go with a secured deposit credit card. This means you have to deposit some money in the form of a fixed deposit which is linked to your credit card. Some banks provide credit card to people having a salary less than Rs 10,000, like Bank of India, Canara Bank, etc. 

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Frequently asked questions

1.What is the credit limit for Rs 50,000 salary?

You can get 2x or 3x of your monthly income. If your salary is Rs 50,000, then you can expect to get credit limit of Rs 1 lakh or Rs 1.5 lakhs. 

2. What credit score I need for a limit of Rs 50,000?

A credit score above 725 is desirable for minimum credit limit. 

3. Can I have more than 5 credit card?

Yes, you can have more than 5 credit cards.

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