How do issuers calculate Credit Card limit? An easy guide

Credit card companies consider several factors to calculate credit card limits. This limit refers to the maximum amount of credit an issuer extends. So, knowing how financial institutions determine this limit is crucial. 

Remember, the max credit card limit in India varies across issuers and individuals as it is based on internal policies as well as creditworthiness. To learn more about how to check credit card limits on your cards and the factors that impact them, read on.

Guide to Credit Card Limits

The maximum you can spend using your credit card in a billing cycle is called your credit limit. On clearing your bill in full, this amount is then restored. You can use it again in the next cycle. 

The issuer establishes the credit limit after scrutinising your credit profile and various factors that impact your creditworthiness. When you make purchases using your card, the amount you spend is deducted from your total credit limit. Once you pay the bill, the credit limit is restored. 

Remember, going above your predetermined credit limit can negatively impact your credit score and increase your interest rate on the balance due. 

Apply For Personal Loan Online

What factors do credit card companies consider to determine credit limits?

These are the important factors that credit card issuers factor in to calculate credit card limits for applicants. 

Debt-to-Income Ratio

Credit card companies assess a crucial detail to determine the limit: your debt-to-income ratio. Simply put, it is the ratio of your income with respect to your dues. 

If you owe a large amount against your income, you have low liquidity for a new debt. As such, credit card companies may not provide a higher credit line due to the increased risk of non-payment of the bill.

Credit Repayment History

Another important factor that credit card companies consider is your repayment history. Your credit report reflects your repayment history and allows lenders to determine the risk associated with extending credit to you. 

A good credit score and a spotless repayment track record indicate that you are a low-risk borrower and hence, lenders may offer a higher credit limit. 

Also Read: Learn To Use Credit Card Responsibly

Credit Utilisation

Another element that lenders take into account to calculate credit card limits is the level of credit utilisation. This ratio refers to the amount of credit you have used against the total credit available to you.

A high ratio indicates an overreliance on credit, making you a high-risk borrower.  Therefore, issuers may not sanction a higher credit limit. Generally, a credit utilisation ratio of under 30% can boost your chances of getting a better credit limit.

How to Check Your Credit Card Limit

If you are wondering, “How to know my credit card limit?” simply check it on the documentation the issuer provided when your application was approved. Alternatively, you can contact your credit card issuer physically or through their customer care team to inquire about the credit limit. 

There’s yet another way to check your credit card limit. All you must do is open your credit card account on the lender’s net banking portal. Log in to your account to know the limit, balance and other details about your card.

If you want to apply for a credit card, choose the Fibe Axis Bank Credit Card. As India’s first numberless credit card, it offers a host of benefits ranging from complimentary access to domestic airport lounges to cashback of up to 3%. That’s not all. You can also link this RuPay card to your UPI and complete transactions without any hassles.

Download the Fibe Personal Loan App or register on our website to apply online for this lifetime-free credit card! 

FAQs on How Credit Card Companies Determine Credit Limit 

What is the credit card limit for a salary of ₹40,000?

Issuers calculate credit card limits assigned to various borrowers through different methods. They usually use the 1.5X, 2X, 2.5X and 3X formulas based on salary. Your credit limit can thus range between 1.5 to 3 times the monthly salary. If your salary is ₹40,000, your credit limit may be between ₹60,000 to ₹1.2 lakhs. 

What is the credit card limit for a salary of ₹50,000?

The max credit card limit in India for a salary of ₹50,000 usually goes up to ₹1.5 lakhs if the issuer uses the 3X calculation. However, this also depends on an applicant’s existing obligations, credit score and other factors. 

What is the credit card limit for a salary of ₹30,000?

The min and max credit card limit in India for an applicant earning ₹30,000 a month is based on a variety of factors. However, issuers offer a minimum limit of 1.5 times and a maximum of 3 times the salary. This comes to a credit limit between ₹45,000 and ₹90,000. 

What is the credit card limit for a salary of ₹25,000?

The credit card limit for an applicant with a salary of ₹25,000 can start from ₹37,500 and extend up to ₹75,000 if the card issuers use the 1.5X – 3X method of calculation.

What is the credit card limit for a salary of ₹18,000?

If a person has a salary of ₹18,000, the credit card limit they can enjoy may range between ₹27,000 and ₹54,000, i.e., 1.5X to 3X of their monthly salary.