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How Credit Limit Is Determined

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Ever wonder how your credit limit is determined by a bank? Have you ever felt bad about having a low credit limit compared to others? Do you sometimes wonder why you were given a very high credit limit? The “magic number” is dependent on a lot of things, but mainly at how the bank assesses your ability to pay back your credit.

Banks love good credit

Banks are ready to give you a higher credit limit if your credit score is good. There are some banks willing to instantly give you a big credit limit upon application but others may put you on probationary mode where you get low credit limit at first; the amount eventually increases over time when you prove to them that you are capable of paying your loan.

The bank is watching you

Banks and credit card companies in general like to monitor your credit status. While most of them can limit any increases on your credit to at least once or twice every year, you can also be rewarded with a higher number of increases if your credit is really good. Sometimes, having good credit is also unfortunate in a sense that you continue getting higher limits regardless of whether you are capable of affording to pay such an amount or not, so if you are not careful, you may find yourself buried in debt.

What to do to avoid debt

The truth is, credit card companies don’t care about your financial status. They just want to know if you are capable of paying your credit card bills on time. Therefore, you need to tell the bank or the credit card issuer to not give you higher credit limit anymore if you think you have enough. You need to know your own financial limitations first so you can set a boundary with your credit card.

To turn down an increase in your credit limit, a simple call to the bank or your credit card company should do the trick. You may have to send them a letter to ensure that they take action.



Featured Credit Cards:

MASTERCARD BLACK – BDO Credit Card


FEATURES:

  • Enjoy FREE membership for both your primary card and supplementary card for the initial year!
  • Earn rewards points on every Php50 worth of transactions on your BDO MasterCard Black!
  • Get special assistance whenever you travel with BDO Travel Desk!
  • Stay in the comfort of your homes and let BDO Black MasterCard do the payment of your monthly utility bills!
  • Supervise your finances with simplicity as you get lots of savings and discounts!
  • Avail of 24/7 customer service whenever you need it!

LJC Credit Card


FEATURES:

  • Monthly membership fee of Php80 and P60 for the extension
  • Get year round discounts
  • Avail of birthday discounts and enjoy fine dining all with RCBC Bankard LJC credit card

Landmark – Anson’s Card


FEATURES:

<ul>
<li>Free membership for 12 months</li>
<li>Lowest monthly fee of Php80 per month</li>
<li>Earn rewards when using your cards and exchange them for free gift certificates</li>
<li>Avail of Weekly Wednesday discounts</li>
</ul>

HSBC Classic and Gold Credit Card


FEATURES:

  • No worries with your annual fees because the initial year will be for free for both the primary and supplementary card holders.
  • Get 1 Rewards point for every Php10 you make!
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Featured Articles:

MANAGE YOUR MONEY: USE YOUR CREDIT CARD WISELY

Like majority of things in life, credit cards give us power that we could use to maximize our way of living. We should learn to use it wisely to avoid any hassles in the future.

But what are really the advantages of having a credit card? We, at comparecreditcards.com, did a survey about the merits of having a credit card and you will be surprised at what came out…

It is a lot easier to buy things with a credit card. It gives you purchasing power that can let you buy things without you having to carry huge amounts of cash around.

You get added security if in case something you bought got lost, stolen or damaged. With both your credit Card Company and your credit card statement guaranteeing you made the purchase, you could actually get insurance on whatever you bought.

Having a good credit history not only helps you apply for a new credit card, but also helps you build a solid financial foundation when applying for other things like loans or sometimes even jobs.

Although we should avoid any expenses that is way out of our budget, it is sometimes unavoidable due to emergencies like fire, floods and the like. But the worst thing is it leads to large purchases in huge amounts of money. With a credit card, you can use money with cash advances and worry about paying it later once you’re back on track.

In addition to those, a credit card also presents further benefits like discounts, free air miles and insurances. But you have to remember that credit card companies start making money once you can’t afford paying off your charges!

The benefits of having a credit card are real and are very helpful on the condition that you take into account your spending limits.

Life is made easier with a credit card, but if used unwisely, they become financial break downs for you. If you do decide to get yourself a credit card, keep in mind these following rules:

  • Track all of your purchases.
  • Never spent beyond your budget.
  • Settle your balance at the due date.

Always bear in mind the responsibility of having a credit card. Spend within your budget and use it wisely.