Credit cards have become essential in today’s world, allowing you to make purchases without carrying cash. Credit card companies often offer to increase your
credit limit, allowing you to spend more on your cards.
However, the question arises: should you accept an increase in your credit card limit? Let's examine
the pros and cons of accepting a credit card limit increase.
Pros and cons of accepting a credit card limit increase
Pros:
1. It can increase your credit score by improving your credit utilisation ratio. This refers to the amount of credit you use compared to the total credit available.
2. It can provide more financial flexibility, allowing you to make more
significant purchases or cover unexpected expenses.
3. It can give you access to better rewards programs and perks often tied to higher credit limits.
Cons:
1. It can lead to overspending, especially if you're not disciplined with your credit card usage.
2. It can lead to higher interest charges if you don't pay off your balance in full each month.
3. It can tempt you to take on more debt than you can afford, leading to financial difficulties.
Factors to consider before accepting a credit card limit increase
When considering whether to accept a credit card limit increase, evaluating your current financial situation and how it might change with the added credit is important. Some of the significant factors are as follows:
1. Current financial situation, including income, expenses and debts
2. Credit utilisation ratio and credit score
3. Spending habits and ability to use credit cards responsibly
4. Future financial goals and how a credit limit
increase fits into them
5. Interest rates and fees associated with the credit card
6. Potential impact on credit score and creditworthiness
Alternatives to accepting a credit card limit increase
If you've decided that accepting a credit card limit increase is not the best decision for your current financial situation, there are several alternatives you can explore.
1. Negotiate with the credit card issuer: If you need more credit, you can try negotiating with your credit card issuer to lower your interest rates, waive fees, or offer a temporary increase in your credit limit.
2. Create a budget: If you're
looking to save money or pay off debt, creating a budget can help you manage your finances better. By tracking your expenses and income, you can identify areas where you can cut back and allocate funds towards your financial goals.
3.
Use a different payment method: Instead of relying on credit cards, consider using cash, debit cards, or other payment methods. This can help you avoid interest
charges associated with credit cards and keep your spending in check.
4. Seek credit counselling: If you're struggling with debt or financial management, seeking credit counselling can provide you with tools and resources to better manage
your finances and achieve your financial goals.
With the Flipkart Axis Bank Credit Card limit, you can enter a world where cashback is given with each purchase. Thanks
to the quick cashback in your favourite categories, including travel, shopping, entertainment and lifestyle, you can earn as much as you want with this card.
[Also Read: How to use credit cards smartly and save costs]
Summing Up
Accepting a credit card limit increase can have several pros and cons. It is essential to consider several factors before deciding. You can make an informed decision that aligns with your financial goals by evaluating your current financial situation,
credit utilisation ratio and spending habits.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
