Credit Card Use: Today, the use of credit cards has increased a lot; people use credit cards to buy their favorite things. If you are also using a credit card, then this news is very special for you. It is often seen that people use credit cards excessively; in such a situation, the credit card limit ends. After which, people get burdened with debt.
Let us tell you that there are many such credit cards that provide interest interest-free credit facility for three months. But people use credit cards excessively and exceed their limit. According to experts, the use of credit cards is 30 to 40 percent less. In this, there will be no unnecessary cash withdrawal, and the credit card will remain strong. After which, it will also be easy to take a loan.
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If we talk about credit limit, then the amount you spend on your credit card, and the bank decides it on the basis of your credit profile, income, and benefits of the card, there is no one formula for this; every bank decides the limit according to its rules.
Why is excessive use harmful?
According to experts, full use of the credit limit increases the credit use ratio. This can reduce your credit score. A low credit score means that it may be difficult to get a loan in the future. If the ratio remains the same, then the customer is at risk of getting rejected.
Banks can reduce your limit
If you repeatedly make your credit balance zero or use the limit completely, then the bank can also reduce your credit limit, which affects your credit score even more. If you do this for a long time, then the bank can close your card. Continuously using the credit limit or making the balance zero spoils your financial image. Banks and credit score agencies assume that you are careless in terms of spending, and you are not able to spend.
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Take care of the cash limit
Just like a credit card, it also has a cash limit, which means how much cash can be withdrawn. Reducing this limit to zero repeatedly will impact your credit score and may also make it difficult to get loan approval in the future.