How You Can Financially Take Advantage of Agreeing to Citibank Credit Card Limit Increase

Credit card issuers are more likely than not to grant relatively low credit limits to applicants who are “new to credit” and go for Citibank rewards credit card application for their first credit card application. 

Later on, when you start using the credit card, issuers will increase the credit limits of existing cardholders if they are confident in their ability to pay their bills on time and to increase their income over time. Although many credit card users would welcome higher credit limits, the fear of getting into a debt trap as a result of increased Citibank credit card expenditures prevents them from taking advantage of such offers. Such credit cards fail to recognise that it is not the increased credit limit but rather the proclivity to spend in excess of one’s ability to pay back that leads people into a debt trap.

So, here we will discuss the 4 advantages of increasing your credit card limit on your credit card and/or also going for a higher limit.

Increases the value of your credit score

The credit utilisation ratio (CUR) is the percentage of your overall credit limit that you have used up to that point. In order to calculate your credit score, credit bureaus take this percentage into consideration. Because lenders often perceive applicants with a credit utilisation rate (CUR) of more than 30% to be credit hungry and hence more likely to default, credit bureaus will lower your credit score if you surpass this threshold. As a result, ensure to keep checking your credit score. Ensure keeping your Citibank rewards credit card expenditures less than 30% of your overall credit limit, as it becomes critical for establishing or enhancing your credit score over time.

Accepting credit card limit enhancement offers from their existing card issuer(s) will help those who tend to frequently transgress this mark keep their CUR within 30 percent of the target. If your current credit card company refuses to increase your credit card limit, proceed to apply for extra credit card(s) from a different credit card issuer as soon as possible (s). If you do not end up increasing your Citibank credit card spending as a result of obtaining access to a bigger credit limit, you will see a reduction in your CUR as well.

Access to increased financial flexibility to deal with emergencies

Having a higher credit limit can serve as a source of emergency funds during times of financial hardship or when faced with financial straits as a result of unforeseen circumstances such as job loss, serious sickness, or disability, among others. 

Having a greater credit limit will also help you to make up for any deficiencies in your financial resources by routing those unexpected expenses through your Citibank rewards credit card while still maintaining your financial liquidity and not having to go through a new application and the tedious process. Those who do not have the financial means to pay their credit card bill in full by the next due date can convert their entire credit card bill or a portion of it into a monthly instalment payment plan. The fact that Citibank credit card EMI conversions typically have tenures ranging from six to sixty months allows card users to comfortably repay their debt over time in smaller instalments depending on their repayment capacity, rather than being burdened with steep finance charges, which are typically between 23 and 49 percent per annum if the debt is not paid in full at the time of conversion.

A larger loan amount is available through a loan against a credit card 

A greater credit limit enables you to access larger loan amounts through a loan against credit card.

These loans are typically sanctioned against the Citibank rewards credit card holder’s credit limit, allowing you to borrow more money overall. Because they are pre-approved in nature, loan against credit cards is only available to a small group of credit card holders who have demonstrated a history of responsible repayment and spending. The disbursement of the loan is frequently completed on the same day as the loan application, making them an excellent tool for credit card users to deal with financial exigencies and gaps.

So, check your loan status after application so that you are aware of the happenings and have a fair idea about when you can get disbursal.

The credit limit that was temporarily restricted when you took out this loan is gradually restored as and when you pay back your Citibank credit card loan EMIs. Loans against credit cards often have terms ranging from 6 months to 60 months, and their interest rates are typically a notch higher than personal loan rates offered by the same issuer to the same card user during the same time period. Also, bear in mind that some credit card issuers may also offer a credit card loan type in which the loan amount is greater than and equal to the credit limit, allowing you to maintain your credit limit free for your normal spending.

Higher scope of availing EMI offers for big-ticket purchases

EMIs are one of the popular benefits of Citibank rewards credit card nowadays. And a large number of merchants and manufacturers are increasingly offering an interest-free revolving credit facility on their goods and services that are acquired through certain credit card issuers. The majority of such merchants and manufacturers also partner with credit card issuers to offer no-cost EMI offers, in which the interest cost of the EMI is covered by the manufacturer/merchant and the card user is only required to repay the purchase price in EMIs, and any applicable GST levied on that interest cost to the credit card company. 

Some merchants/manufacturers also provide additional discounts or cashback to customers who choose no-cost EMI on specific items or services, thereby lowering the overall purchase cost even further. As a result, increasing your credit limit will allow you to purchase more items and services through merchant EMI offerings, increasing your purchasing power. Because unpaid credit card EMIs may cause your credit limit to be blocked until they are paid in full, increasing your credit limit will allow you to spend more money on your normal credit card purchases while keeping your credit limit open. You can time to time-check your credit limit from the app or on net banking.

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