The credit card has various limits for various users. The bank allows using the given limit from one billing cycle to another to use credit cards. The credit cards are categorized as silver cards, gold cards, and titanium & platinum credit cards. And various card companies play a median role in credit card usage, i.e., American Express, Visa, Mastercard & Rupay. The banks provide the actual card out of the service providers to the customers. Banks offer different limits to different users for the usage of credit cards considering various parameters like salary of the customer, bank balance that the customer maintains, and the customer’s credit score.ETC. The credit card usage minimum limit starts from Rs.25,000 onwards and ends up to Rs.5-10 lakh per month limit. The credit card bill is calculated according to the credit card cycle of the customer, which the customer should inquire with the bank for the customer’s billing cycle. The customer can avail of various attractive offers on credit cards for dining offers, merchandise, free lounge facilities at airports.ETC. Thus availing of credit cards is of great use to the customers.
The bank charges a heavy penalty on the credit card bill if the customer delays the payment. Also, in case of the usage of credit cards exceeding the limit, the customer may be charged with the overdraft penalty on the credit card. A credit card is also beneficial to improve the credit score of an individual. If the customer repays the credit card bill on time, then, in that case, the customer’s credit score may get improved, which can be beneficial for the future availing of the credit like home loans, car loans, or else personal loans. The customer receives a pre-approved credit card from the bank in which they have an account, and thus credit card can be availed easily from the bank against good maintenance of the bank balance. In case of applying for a credit card from other banks where the customer does not have a bank account, then, in that case, the customer has to submit the documents like address proof, employment proof, salary proof, and government recognized identity proof.ETC. For availing of the credit card. The bank can approve the credit card only if the credit score is good for the customer.
Whether usage of the entire credit limit is safe or not?
- Using the entire credit limit means using the credit card up to the fullest amount approved by the bank. Thus, in that case, the customer should have the repayment capacity to pay the full amount within the due date.
- The customer can also make the part payment if allowed by the bank, and the remaining can be carried forward in the next billing cycle.
- Also, the customer can convert the credit bill into three months EMI or else six months EMI bill to convert for which the bank may charge interest.
- The credit score may get spoilt if the customer’s high amount of credit card bills is not paid.
- After complete usage of the credit card bill, further usage may go towards the overdraft facility. Thus, in that case, an overdraft penalty may be charged to the customer.
- The high usage of credit limit may show that the customer has an excessive tendency to spend the money, and the banks are at an increased risk of getting defaulted; thus, the credit score may take a hit in that case.
Conclusion:
Thus we can conclude that the customer should use the credit limit wisely and not overuse credit cards. The overdraft facility may lead to a penalty being charged by the bank. Thus the customer is recommended that they should do optimum usage of the credit card. Overuse may lead to a reduction of credit card points. It is recommended that the customer should ideally make 60-70% of the use of credit limit for the credit card beyond which it should not exceed. Banks may feel optimistic while extending future credits if the customer is doing the optimum usage of a credit card.
