What Is Credit Limit On A Credit Card?
Credit limit on a credit card - this is nothing but a maximum amount within which the bank is ready to provide a loan to the client. Simply put - this is the limit in which the credit institution trusts his borrower.
Limit on a credit card is renewable - when the customer returns spent money to the bank, it can take them again on credit. That is, once issued the loan, it can be used repeatedly.
Amount of credit cards depends on the solvency of the client, the type of card and the credit history of the client. The minimum credit limit is one thousand Dollars, but the market average limit is set at five thousand Dollars. Maximum same size can reach several million Dollars. Most often, banks adhere to a simple rule - the maximum credit limit should not exceed 3-5 monthly average income of the borrower.
Credit limit prescribed in the contract, and given to the client in obtaining a credit card. But this does not mean that it can not be changed. So if a person admits repeatedly late on the credit, its line of credit may be reduced, if not locked. But, as practice shows, such a measure is rare.
Much more often, banks prefer the contrary increase the limits of their trust. So, after 3-6 months (in rarer cases, 1 month), careful observance of payment discipline, and active use of borrowed funds to pay for goods and services rather than cash withdrawals, the bank may increase the original limit. On average, its market growth is 20-25 %, and sometimes all of 50-100 %.
There are two options for increasing the credit limit: on the customer or by the decision of the bank, which then notifies the borrower through his letters or other messages.
After changing the balance of funds in accordance with the instructions of the Central Bank, a credit institution calculates new payment schedule and total cost of the loan, and then notifies its borrower. The user card can always refuse to increase, turning this statement to the bank. Sometimes the credit limit may be revised at reissue cards, but most bankers do not tie this action (increase) to some specific events.
As a rule, cardholders are very positive about the bank's decision to increase the credit limit, but there are those who consider it wrong and ultimately reject it.
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