Pros and cons of increasing your Credit Card limit

2 MinsJune 5, 2023

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.

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.