High Credit limit on credit card- Good or Bad ?

High Credit limit on credit card- Good or BadNo matter how much we earn but we all have this dream of getting a credit card with the highest credit limit. But generally we all tend to forget that higher credit limit is like a double edge sword, it has its pros and cons, let’s have a look at them and see if it’s really good to have a credit card with high credit limit:


  1. Lower Credit utilization

    The minute you get a high credit limit card, automatically your credit utilization ration goes down like for example: if your card limit is Rs 60,000 and your monthly card usage is Rs 19,000 which means that the card utilization ratio is 30%, but assuming your credit limit is increased to Rs 80,000 then automatically the card utilization will go down to 18%. This will directly help you to improve your credit score. Normally credit utilization ratio should be less than 30%

  2. Increased spend power on credit cards

    With the increase in credit limit, you have the convenience of making high-ticket purchases on your credit card and you no longer need to have cash or cheques for those purchases.Also in the case of emergency, cards with higher credit limit can be of great use. They can be used anywhere and at any given point of time, no matter be that cash or for making payments at merchandise.

  3. Faster accumulation of rewards

    One of the biggest reasons why credit cards are popular is because of its rewards and benefits programs. A card with higher credit means you have more room for purchases which in return will give you reward points and they can be redeemed within the time frame.


  1. Managing multiple credit cards

    Of one of the biggest advantage of having increased credit limit is, it helps for managing multiple cards. But not to forget, with multiple cards comes the pain to manage them, track them and keep them safe as well. If you are not good at managing those credit cards you will end up paying a late fee, interest on late payments and affecting your credit score negatively.

  2. Falling in a debt trap

    When you do not give cash or have to check your bank account before you write a cheque, you might not fully realize how much you have spent. This is due to the fact that going to a credit card to make the payment satisfies your immediate need for purchase without having the check and balance of counting cash that reinforces that you have a trade off and might want you to rethink the purchase. Therefore with high credit limits as you start spending more on your credit cards, there is a possibility that you might fall into a debt trap. This is likely if you do not keep a very close track on your spends. mymoneykarma.com helps you track your expenses automatically and avoid this.

    As we see there are more benefits to having a higher credit limit but then it all makes a huge difference when you do not have control over your spending habits and if you are not good at your money management. And by the time you realize, you would already have fallen into the debt trap. Use the tools at mymoneykarma.com to stay on top of-of your finances and enjoy the benefits of your high credit limits.

Leave a Reply

Your email address will not be published. Required fields are marked *