Sushant, an MNC employee, has been contemplating taking a home loan soon and has finalized the property and shortlisted some lenders as well. He is hoping to soon realize his dream of owning a home and shift with his spouse and parents. When all looks set, he gets a call from his credit card issuer. Sushant, who has a credit limit of Rs.60,000, is offered an increase in the limit due to his timely repayment behaviour and good credit score. He is now eligible for a limit of 1,00,000. But he is hesitant to take it. He is stuck in a dilemma whether to accept his bank’s offer of the enhanced credit limit on his current credit card or to opt for a new card from some other lender, or say no to both and just focus on his application and process of availing Axis Bank Home Loan.
Just like Sushant, surely there are many people who face this dilemma due to the pre-existent fear of increasing their bill amounts and spending, especially before big financial steps like home loans. However, if you have been a borrower who knows how to manage their credit wisely and pay their bills timely, it is wise enough to accept your bank’s offer of increasing your credit card limit as this will imply many benefits for you.
Below are some of the advantages of an enhanced credit limit and why it can not harm but, in fact, help you financial before taking an Axis bank home loan:
Higher credit score and lower credit utilization ratio- Once your credit limit increases, your credit utilization ratio declines, provided your credit usage remains the same and doesn’t rise. The credit utilization ratio (CUR) is the percentage of the total credit limit, which is you use on a monthly basis. For instance, when you utilize up to Rs.25000 per month and your credit limit increases from Rs.50,000 to Rs.1,00,000, your utilization ratio drops from 50% to 25%. A lower credit utilization ratio (CUR) improves your credit score because higher credit utilization depicts constant financial crunch and credit hunger, whereas a lower utilization shows that you manage your finances properly and pay timely. Credit bureaus take a lower credit utilization ratio as a favourable factor while compiling your credit score.
Acts as an emergency fund- An increased credit card limit acts as a source of emergency funds whenever you are stuck in a financial crisis, such as health emergencies, loss of a job or some other unforeseen expense. With an enhanced credit limit for your card, you would be able to comfortably use your credit card for urgent funds and eliminate the option of a personal loan or borrowing from someone during the crisis. Moreover, as you the go-ahead to take the big step of Axis bank home loan, having a higher credit limit would help in increasing your financial liquidity, as you can use the credit limit if the need arises when repaying the big-ticket home loan’s EMIs. Also, remember that during home loan repayment, you can always contact Axis Bank Home Loan Customer Care whenever you have any queries surrounding your home loan.
Higher rewards- Banks allow credit limit enhancement to those customers who have been good borrowers and have been paying timely. So if your bank increases your credit limit, you are a trustable and worthy customer. Along with higher limits, the bank provides higher reward points to these customers, which can be availed in the form of discounts, cashback offers, loyalty programs etc. So be sure of getting higher rewards in future as you spend through your credit card with increased limit.
Negates the need for multiple cards- People often apply for additional credit cards to increase their credit limit. Keeping multiple credit cards is cumbersome as it not only increases your hassles of handling them all but also increases your financial burden in case you aren’t able to pay off each of them timely. Handling multiple cards also incurs additional costs in the form of annual maintenance charges. Hence increasing the credit limit of your present card lets you escape these additional costs and the menace of handling multiple cards’ payments. And in case you face difficulty in repaying the multiple credit card bills due to the presence of high home loan EMI, you can contact Axis bank home loan customer care to try and get your EMI amount reduced, maybe through the extension of the home loan tenure.
Improves the possibility of bigger loans- An increased credit limit on your credit card can act as a gateway to procuring a higher amount of loans from your bank. This holds true for those contemplating an Axis bank home loan as well, as your credit history and profile is checked by a lender before giving a home loan too. Since you have been granted an enhanced credit limit, this means your bank treats you as a worthy customer who doesn’t default on his/her payments and is an efficient utilizer of their credit sources. So you can use this point as a basis to avail a better loan deal with your bank by contacting Axis bank home loan customer care and emphasizing your good credit handling skills and history.
Assists in big-ticket purchases- Credit limit enhancement results in more buying power since you have more funds, and this power can be used to make those big-ticket purchases by choosing payment options like EMIs and thereby making monthly payments comfortably. Many banks provide interest-free payment periods when you make large transactions through a card, thus allowing you to spread your repayment over a certain period. Using your enhanced credit card for these big purchases also fetches you useful reward points.
For example- If you are planning to buy a two-wheeler worth Rs.45,000 and the credit limit on your card is Rs.30,000 only. Here, even if you want to use your credit card to earn reward points for this purchase, you will not be able to do so in its entirety because you will have to forgo reward points on that additional amount of Rs.15,000, which your credit card limit doesn’t provide. This is where an enhanced credit limit would help you to procure those reward points.
Also, keep in mind, no matter how many credit cards you own, one, two or five, it is all about financial discipline. But since financial exigencies or ups and downs are part and parcel of life, never forget to at least approach Axis bank home loan customer care when serving your Axis home loan, as they would be happy to help you bail out of a financial crisis in whatever way possible.