This guide tells you about your credit card credit line. First, we’ll explain what a credit line is and what credit limits are on different banks’ credit cards. After that, we’ll tell you how to raise your credit line and what to look out for before changing your credit line.
What is a credit line?
Credit line is a term related to credit cards. Credit line refers to the maximum amount of credit that can be obtained with a credit card. For example, with a credit limit of $ 5,000, it is possible for a credit card holder to purchase goods or services worth $ 5,000 on credit. The credit line varies depending on the creditworthiness of the credit card and the credit card holder.
There are many factors that influence the final determination of a credit line. For example, an applicant’s creditworthiness (such as income and existing loans) affects the credit line. As a rule of thumb, the credit line is often considered to be roughly the same as your monthly salary. Usually, the credit card ranges from $ 1,000 to $ 10,000.
The credit line is flexible
The credit line is part of the core business of a credit card, which is to offer flexibility to consumers. In practice, with a credit card credit line, the consumer always has access to credit within the credit line. This is one of the reasons why acquiring a credit card is so popular and why it is so popular around the world. In addition, the consumer usually receives a non-interest payment period of 30 to 50 days for his purchase.
How big can I get a credit line?
If your credit card terms state that your credit card has a credit limit of up to $ 5,000, you won’t be able to get a higher credit limit on that credit card – even if you are a millionaire and have a clean credit history.
There are also credit cards that do not have a predefined maximum credit limit. Thus, such cards do not prescribe that the cardholder can obtain a credit limit of, for example, a maximum of EUR 10,000, but the credit limits are agreed between the bank and the customer.
Sometimes an American Express Gold Card can also be listed. This is because the maximum credit limit on American Express is very flexible and increases according to the customer when needed. However, American Express is strictly a credit card but a payment card.
What are the credit limits on credit cards?
However, credit cards usually have a predetermined maximum credit limit. For example, it can range from $ 5,000 to $ 20,000.
Not always the maximum amount is granted to the credit card holder, but the credit limit may be lower. For example, Nordea has a different credit line for students. Typically, your credit line is affected by, for example, your Payment History and your income level.
It is good to note that the cards offered by the same bank may have different credit limits: often called basic credit cards have a lower credit limit than premium, gold or platinum credit cards. In addition, while obtaining a credit card usually requires regular income, premium credit cards often have an additional requirement that lower income cannot afford to get a premium credit card.
Is it always worth applying for the highest credit line?
In principle, you should always apply for a high credit line on your credit card. If a credit card gets a high credit line, it gives the consumer financial leeway and room for maneuver, which is the main reason for most to get a credit card in the first place. The card allows for larger purchases for which there is currently no money on the account, and also guarantees a non-interest payment period.
If you suspect that a higher credit limit is not conducive to your own financial management, you should not seek it.
What if the credit line request is too high?
However, applying for a high credit line on a credit card can result in a credit card application being rejected if the lender considers that you are applying for a too high credit line in relation to, for example, salary income.
However, it is not a good idea to reject your loan or credit card application, but to make a new application go, this time with a lower credit line.