If a potential customer is “new to credit” and applies for a credit card for the first time, the credit card issuer will more often than not give them a relatively modest credit limit.
Issuers will enhance the credit limits of current cards if they are confident in the cardholder’s capacity to pay bills on time and rise in income over time, which can be verified by checking the yes bank credit card application status and receiving plus using the card. The risk of falling into a debt trap as a result of increasing credit card spending discourages many credit card users from taking advantage of larger credit limits, even though they would welcome them. These credit cards fail to recognise that the tendency to spend more than one can afford to pay back is what traps people in debt, not a raised credit limit.
So, in this article, we’ll go over the four benefits of raising your credit card limit on your card and/or choosing a higher limit when you decide to apply for a credit card the next time.
makes your credit score worth more
The amount of your total credit limit that has been utilised up to that time is known as your credit utilisation ratio (CUR). Credit bureaus take into account this proportion while determining your credit score. Credit bureaus will decrease your credit score if you go above this limit since lenders generally view applicants with a CUR more than 30% as credit hungry and consequently more likely to default. Like a result, make sure to continue checking your credit score, just as you would after applying for a credit card. As it becomes increasingly important for building or improving your credit score over time, make sure that your credit card spending stays below 30% of your total credit limit.
Those who frequently exceed this limit can keep their CUR within 30 percent of the target by accepting card limit increase offers from their current card issuer(s) or opting to apply for a higher yes bank credit card limit. Apply as soon as possible for additional credit cards from a different credit card issuer if your existing credit card provider declines to raise your credit card limit (s). You will also notice a decrease in your CUR if you do not ultimately increase your credit card expenditure as a result of having access to a higher credit limit.
more financial flexibility to handle unforeseen circumstances
In times of financial difficulty or when in need of emergency cash due to unanticipated events like job loss, severe illness, or disability, among other things, a greater credit limit can be helpful.
With a higher credit limit, you can also cover any shortfalls in your financial resources by using your credit card to pay for unforeseen expenses while maintaining your financial flexibility and avoiding the need to repeatedly fill out new applications, endure the time-consuming application process, and check your yes bank credit card application status. If a cardholder lacks the resources to pay their credit card account in full by the next due date, they can convert all or part of their balance into a EMI payment plan. Yes bank credit card EMI conversions often have tenures ranging from six months to sixty months, giving cardholders ample time to settle their debt in manageable monthly instalments based on their ability to do so without incurring the high finance costs that would otherwise be incurred (typically between 23 and 49 percent per annum) if the debt was not paid in full at the time of conversion.
If more money is needed, a loan against a credit card is an option.
You can obtain larger loan amounts using a loan against credit card if your credit limit is higher because you won’t need to individually apply for a new credit card to receive that loan.
You can borrow more money altogether because these loans are often sanctioned against the credit limit of the credit card holder. Loans against credit cards are only available to a select few credit card holders who have a track record of careful repayment and spending because they are pre-approved in nature. When dealing with financial emergencies and gaps, yes bank credit card users can use them as a great tool because the loan disbursement is typically done on the same day as the loan application.
Check the status of your loan after applying in the same way that you would check the yes bank credit card application status, so that you are aware of what is occurring and can reasonably predict when you will get disbursement.
As you repay your credit card loan EMIs, the credit limit that was temporarily reduced when you took out this loan is progressively reinstated. Loans secured by credit cards frequently have maturities of 6 to 60 months, and their interest rates are typically slightly higher than those of personal loans made available to the same cardholder by the same issuer over the same time frame. It’s worth noting that some credit card companies provide a loan option where the loan amount is equal to or larger than the credit limit, leaving the credit limit untouched for everyday purchases.
Greater possibility of utilising EMI offers for expensive purchases
Currently, EMIs are a well-liked perk of applying for a credit card.
Additionally, many manufacturers and retailers now provide an interest-free revolving credit facility for purchases of their products made through certain credit card issuers. Most of these retailers and manufacturers also work with credit card companies to provide no-cost EMI deals, in which the manufacturer or retailer pays the EMI interest costs and the cardholder is only required to pay the purchase price in EMIs and any relevant GST levied on those interest costs to the credit card company.
Customers who select free EMI on particular goods or services may also obtain extra discounts or cash back from some retailers or manufacturers, substantially reducing the cost of the transaction. Your ability to buy more goods and services through merchant EMI offers will increase when your credit limit is raised, giving you greater spending power. By raising your credit limit, you can spend more on your typical credit card purchases without risking having your credit limit stopped until all outstanding yes bank credit card EMIs are paid in full. Just like you can always check your yes bank credit card application status after applying, you may periodically check your credit limit on the app or through online banking.