Customers whose CIBIL score is good, they often get such calls or messages from the bank in which they are offered to increase the credit limit.
Some people accept these offers to increase their credit limit while some do not increase their credit limit. Today we are telling you that what are the disadvantages of the benefits of increasing the credit limit.
Benefits of increasing the credit limit
An advantage of increasing the credit limit is that your credit score can improve. Your credit limit increases only after your CIBIL score is corrected and the repayment history is corrected.
If your credit limit is increased, then you will be able to better cope with difficult times like going to job, illness, accident.
There is also an advantage that if you cannot pay the credit card bill till the next due date, then you can get your entire bill or parts of it converted into EMI.
If your credit limit is increased then you can get more loan in lieu of credit card. However, those who have a good credit history and who have paid on time will get this loan.
Disadvantages of increasing credit limit
Perhaps the biggest disadvantage of a large credit limit is that you can increase the debt burden. Increasing the credit limit will increase your spending capacity. If you do not use a credit card thoughtfully, then you will be caught in the debt trap.
If you do not pay the bill, you will have to pay more interest on the outstanding amount. If your credit limit has increased and you have spent more then it is more likely that you will not be able to pay your bill in full. In this case, you will have to pay more interest.
Nidhi Malviya is fun loving girl. She writes at NoobFeeds about various topics related to Finance, Technology, Business etc.