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Credit Card Tips: Banks often give you a credit card limit that exceeds your salary. Let's explore the reasons behind this and what factors banks consider when setting the limit.

Why is the credit limit higher than the salary?

Credit Card Limit: Today, credit cards are not just a means of payment, but have become an integral part of people's lifestyle. People often use them for various needs, such as online shopping, travel, movie tickets, EMIs, and cashback offers. Therefore, people often wonder why banks grant them a higher credit limit when their salary is ₹50,000 or ₹60,000.

In fact, banks not only look at your income, but also your credit score and payment record. However, getting a higher credit limit doesn't mean you should spend the entire limit.

Why is the credit limit higher than the salary?

Banks check your salary, as well as your credit score and payment history. A good credit record increases your chances of getting a higher limit. The biggest benefit to the bank is that the more payments you make with your card, the higher the commission it earns from merchants. Furthermore, if you don't pay the full bill, the bank also earns interest and late fees.

How much should I spend with a credit card?

It's best to limit your credit card usage to 30% of your take-home salary. For example, if your salary is ₹45,000, try not to spend more than ₹13,500 on your card. Exceeding your limit can impact your credit score.

Is it right to have more than one credit card?
 

• It is not wrong to have more than one card as per the need.
• But it is important to make payments on all cards on time.
• Use auto-pay or reminders to avoid missing any payments.
• Avoid using credit cards for every small purchase without need.