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Things to Know about Kredittramme På Kredittkort



Things to Know about Kredittramme På Kredittkort

Credit cards were invented more than half a century ago. But they became a thing in the nineties. Back then, it was a matter of prestige and something that not many people dare to use. Today, it holds a high spot as one of the most popular means of payment. And there are a bunch of reasons for that.

First off, the convenience of having plastic money instead of carrying cash is a big deal. Imagine strolling into your favorite store, grabbing whatever you need, and just swiping a piece of plastic. Plus, this means of payment is accepted almost everywhere, so you can shop online, book flights, and do all sorts of stuff without breaking a sweat. Tips on responsible car use are on this page.

Another significant reason why people use credit cards is the perks and rewards. Many companies have rewards and loyalty programs where you can get cashback, travel miles, or points by simply using your card for daily payments. It’s like earning while spending. And let’s not forget the added protection of using plastic money, especially for online payments. 

As powerful as credit cards are, they’re not all-mighty. There’s a credit line on them, meaning your spending is limited. But it’s generally more than enough to cover urgent expenses or finance large purchases when you need them.


What Is a Credit Card Limit?


Your credit card limit is like a spending cap the card issuers set for you. They consider a variety of factors to determine your creditworthiness. They check your income, payment history, and how responsible you’ve been with money in the past. If all is good, you can get a card with a reasonable limit and enjoy all its perks.

A limit on your plastic is the maximum amount of money you can spend every month without getting into trouble. But that doesn’t mean you should do it. No matter how challenging it is to spend a few thousand dollars you don’t currently have, you’ll have to repay the entire amount sooner or later. And there comes trouble.

How much you’re allowed to spend is causally related to your credit score. Based on this parameter, the issuer evaluates your borrowing power and sets a limit. Vice versa, the percentage of credit line usage tells about your spending habits and behavior towards obligations – how much you spend per month, whether you pay off the balance in full or roll it, etc. All this affects your credit rating.


How Issuers Determine Card Limits

If you’ve been approved for a credit card, you can use it for whatever you want, and there are no restrictions. But your issuer determines how far you can go. A card limit is generally higher than your monthly income. In general, it’s one of the critical factors in determining the card limit, but there are other things issuers look at when deciding about your spending limit line.

As for the methods of determining card limits, they may vary depending on the issuer. For example, some will have strict requirements, while others will loosen them a bit. Anyhow, card companies want to ensure you have enough funds to pay the debt on the card (you don’t have to do this in full every month, although it’s desirable).

Credit History


On top of your income, the issuer observes your credit history. It’s a record of how you’ve managed payments in the past. Whether you paid the debt on time or were late, how many active/ inactive lines you have, etc. If you have a solid track record of timely payments and keep your balances low, you’re more likely to get a higher credit card limit.

On the other hand, if you’ve failed to repay previous debts on time, a card issuer may set your credit line low. The same can happen if you have no credit history, for example, when you just graduated and got your first job. But don’t let that discourage you because you can quickly get a limit increase if you show the issuer that you’re responsible and keep the utilization rate low.

Spending Habits

The decision on the credit limit is also influenced by your spending habits, viewed together with your behavior towards obligations. For example, if you’re a big spender but have no late payments recorded, issuers might allow a higher limit. 


But if you’re new to the credit game or have had some slip-ups, you’ll likely have to start with a lower limit. You can increase it eventually, but you have to prove good spending habits and positive changes in your overall financial situation.

What If You Go Over Limit


Just because you have a limit doesn’t mean you should max it out. In fact, it’s usually best to keep your spending well below that line. Financial experts suggest keeping your card utilization level at 30 to 40% of its limit. And you might wonder why.

Sometimes, you may go too far with your spending and pass the card limit. That’s not good because you may not have enough money to settle that huge card balance at the end of the month. In that case, you can face some serious consequences.


Using plastic money instead of cash already carries high costs. If you max out its limit, these rates could skyrocket, and you might get hit with hefty fees. Apart from the fact it can worsen your financial problems, it can leave a long-lasting bad mark on your credit score. That puts you in a very unfavorable situation if you ever need a loan in the future.

So always use your plastic money responsibly and keep your spending in check. A much better option than the maximum use of one card is several cards that you’ll use within a utilization rate of 30%. You can pay off some balances in full and roll others as long as you can. It’s a much cheaper and less painful solution than overcharging a single credit card.

How to Increase Card Limit


You have been using plastic money for some time, adhering to the rule that you only do so when necessary. Besides, you’ve regularly repaid your balance and haven’t faced any fees, which most likely had a favorable effect on your credit score. So you might want to check out and see whether it’s time to increase your spending limit.


Even if an ideal scenario like the one mentioned happened, it is not a guarantee that the issuer will approve the limit increase. As with determining this line, it depends on many factors. However, the responsible use of plastic money is certainly a big plus. Plus, situations such as salary increases or DTI reductions can also increase your chances.

Before applying for a card limit increase, check your credit report and settle all your dues. Issuers will perform a credit check, meaning your credit score will suffer a hard inquiry, but it is only a matter of a few points that you can return in a very short time. If you meet the requirements, the limit increase will be approved.

A higher line of credit has its good sides. You might think you’ll spend more, but it doesn’t have to be that way. If you continue to use your plastic money as before, you won’t spend more, but you’ll lower your card utilization rate. That’s good, as it means you can comfortably carry more balance. But it’s still best to pay it fully every month.

Credit cards often come with sweet benefits you can enjoy only by spending within your means. A credit limit is there to warn you when you’re in trouble of overspending so you can avoid it. It’s a line you shouldn’t cross but stay way below it. Only that way can you avoid knocking interest and high fees that give plastic money a bad name.

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