Wednesday , July 24 2024

If you are using a credit card, never make these 5 mistakes, the bank will reduce your limit

Credit Card Limit: If we look at the data of Reserve Bank of India, credit card defaults have increased to Rs 4072 crore by March 2023. If you often delay payment with your credit card, the bank may consider you a risky customer. The bank feels that you do not have enough money to repay the credit card dues easily, so the bank reduces your credit limit.

1. In case of default in payment

If we look at the data of Reserve Bank of India, credit card defaults have increased to Rs 4072 crore by March 2023. If you often delay payment with your credit card, the bank may consider you a risky customer. The bank feels that you do not have enough money to repay the credit card dues easily, so the bank reduces your credit limit.

2. Carry forward the balance amount after paying the minimum due amount

There are some people who carry forward their outstanding dues to the next month after paying the minimum dues. It does not matter if you do this two or three times, because in that case you pay interest on the remaining amount, which earns the credit card company. But if you make it your practice, it will increase your outstanding debt and it is possible that you will directly get caught in a debt trap. This may make it difficult to repay your loan. Which is a big risk for the credit card company. Even in such a situation, companies reduce the card limit of the customers.

3. Using more credit limit than required

There are many customers who use more than their credit card limit. The ratio of the limit you get and the amount you use is called the utilization ratio. If this utilization ratio increases, then the credit limit also decreases. Suppose you have a limit of Rs 1 lakh on your card and you use the limit of Rs 80 thousand to 90-95 thousand per month, then this is a negative thing for you. Actually, credit card companies see such people as taking too much credit and risky users. Such situations often reduce the credit limit of customers.

4. Using credit cards excessively

Many times customers take all the credit cards one by one. Due to which their total limit increases rapidly. Suppose the credit limit of one of your cards is Rs 1 lakh, and you have a total of 10 credit cards, then your total limit will be Rs 10 lakh. But now if you use these cards for a longer time, then the bank will feel that you are too dependent on loans and you are a risky user. So that the bank can reduce your credit limit in this situation.

5. Use the card very little

There are some customers who build credit, but do not know how to use the card properly, or prefer not to use credit cards. As a result, they rarely use credit cards. Banks also reduce the credit limit of such customers, because banks will benefit only if they use their cards extensively.