July 3, 2025 · 10 mins read
Santhosh Kumar
Credit Cards have become a ubiquitous financial tool today, offering the convenience of making purchases without carrying cash and providing access to a line of credit for emergencies or unexpected expenses. Like any financial tool, Credit Cards come with their own set of risks and advantages. This makes it necessary to be aware of these risks and advantages to make informed decisions about their usage. Here, we will explore the potential benefits and drawbacks of using Credit Cards and provide tips for using them responsibly.
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First things first! Credit Cards must be used responsibly and well within your capacity. This is one of the reasons why Credit Cards come with a monthly spending limit in line with the Cardholder’s income, which is set by the issuer. Wonder what the Maximum Credit Limit is for a Credit Card in India? This is a key factor for shoppers to consider, along with Credit Card Interest Rates. Credit Limit is the amount that your Credit Card Company allows you to borrow each month. A higher Credit Limit can give you more room for funds, help make bigger purchases and pay them off. In this blog, we will explore the highest Credit Card Limit in India and how you can increase it with ICICI Bank Credit Cards.
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The Maximum Credit Limit on a Credit Card in India varies depending on several factors such as your Income, Credit Score and History. Usually, Banks and Credit Card issuers determine the Credit Limit based on your creditworthiness and ability to repay. The Reserve Bank of India (RBI) has not set any specific limit for Credit Cards but has put in place some guidelines for Banks and other Credit Card issuers to follow.
The Credit Limit for a Credit Card should not be more than twice the monthly income of an individual. Conversely, the issuing entity can set the limit based on the credit score and repayment history. Hence, it is essential to be financially capable, maintain a high credit score and have a good credit history to get a higher Credit Limit.
In terms of figures, the limit on Credit Cards in India can range from a few lakhs to crores of rupees. A high Credit Limit does not mean you have to max out your Card. It is imperative you use it wisely and not overspend beyond your repayment capacity.
Credit Card Interest Rates are another significant factor when choosing a Credit Card in India. The Interest Rate is the amount charged by the Credit Card Company on the outstanding balance on your Card. Keep yourself updated on these rates if you're looking at high Monthly Credit Limits. Make sure you factor in all of these before making a decision.
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Being a Credit Card user, you understand the convenience, ease and benefits.
If you’ve had your Card for a while and have increased your financial capacity, consider increasing the Limit on your Credit Card and bring it up to a level that suits your lifestyle and spending habits. This has some benefits for you that can.
1: Bring you more Rewards and Cashbacks: Credit Cards come with terrific Rewards, Cashback, Points and other Incentives. With a higher Credit Limit, you'll be entitled to higher Rewards and Benefits.
2: Improve your Credit Score: The biggest benefit of increasing your Credit Limit is its potential to improve your Credit Score, which is calculated on certain parameters that include the Credit Utilisation Ratio. Increase the credit available to you by increasing your Card's Limit. This will help keep your Credit Utilisation Ratio low and improve your Credit Score.
Get greater purchasing power, more financial flexibility, and the ability to meet unexpected expenses with an increased Credit Card Limit.
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A credit limit and available credit are not the same. The credit limit is the total amount you can borrow, whereas available credit is the amount that is remaining for you to use, including if you carry a balance.
For example, if you have a credit card with a $1,000 credit limit, and you charge $600, you have an additional $400 to spend. If you make a $40 payment, your balance would fall to $560, and you would then have $440 in available credit.
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Your credit limits can affect your credit score, a crucial number that lenders use to determine whether to extend new credit and what interest rate to charge you for it. That's because your credit utilisation ratio, or the amount of debt you have outstanding at any given time as a percentage of the total credit you have access to, is one of the factors that goes into computing your score.
The lower that percentage, the better. So, it pays to be aware of your credit limits and try to keep your borrowing well beneath them. Generally speaking, lenders look unfavourably at a credit utilisation ratio that exceeds 30%.3
In most cases, lenders reserve the right to change credit limits, either raising or lowering them. If you pay your bills on time every month and do not max out a credit card or line of credit, the lender may increase your credit limit.4
An increased credit limit has a number of benefits, including potentially increasing your credit score by lowering your credit utilisation ratio. It also gives you access to more credit if you should need it, such as in an unexpected emergency.
On the other hand, if you fail to make regular, timely payments or if there are other signs of risk, the lender may opt to reduce your credit limit. A reduction of your credit limit will raise your credit utilisation ratio and potentially damage your credit score. If a lender decides to lower your credit limit, it is generally required to notify you.4
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Available credit is the unused portion of a credit limit. So, if you have a total credit limit of 10,000 on your credit card and you have used 5,000, you would have the remaining 5,000 as an available credit. Available credit can fluctuate throughout the billing cycle based on account usage.
While using a credit card, it is important to understand how the credit limit works. If you have a low credit limit, then you can always work on increasing the credit card limit. But remember increased credit card limit is an opportunity for a good credit score and not an opportunity to spend more than what you should.
Your credit utilisation ratio looks at how much of the available credit limit you tend to use. If your credit utilisation ratio is high, lenders might think of you as credit-hungry, which in turn can adversely affect your credit score, making it difficult for you to get a loan in the future.
However, a lower credit utilisation ratio simply means that you know how to manage your finances well and you have a decent hold on your repayment capacity. Let's understand the credit utilisation ratio with an example-
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Typically, banks closely monitor an individual's credit card usage and determine whether a particular cardholder should be granted a higher credit limit. If you are eligible, the bank will inform you via your registered mobile number or email ID. You can increase your credit limit in the following ways-
1: Use your credit card wisely- It is advisable to use your credit card regularly and not exceed the credit utilisation ratio. You should keep your credit utilisation ratio below 30%.
2: Request a credit limit increase from your bank. You can also request a credit limit increase from your bank. The majority of banks agree to do so, depending on the reason you provide. You can ask for the same via net banking or by visiting the nearest branch.
3: Pay your bills on time - If you are regular and timely in making your credit card payments, the bank will automatically increase your credit limit.
4: Apply for a new credit card- You also have the option to apply for a new credit card with a higher credit limit than your current one.
If you make a transaction over the credit limit, you will not only be charged an over-limit fee, but using the over-limit facility can also hurt your credit score. Moreover, it also reduces your chances of getting approved for a loan during financial emergencies
If you make an over-limit transaction and decide to convert it into EMIs, your actual credit limit will be blocked in such a case. Let's understand this with an example-
Suppose you have a Rs. 10,000 credit limit remaining, and you decide to purchase Rs. 20,000, then convert the over-limit transaction into EMIs. After making this purchase of Rs. 20,000, you will exceed your credit limit by Rs. 10,000. Hence, you will be charged an over-limit fee of 3% of the over-limit amount. Even though you convert the purchase into EMIs, your exceeded limit of Rs. 10,000, along with the available limit of Rs. 10,000, will be blocked. Only after you have paid your EMIs by the due date will your credit limit be released.
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Although all eligible customers are informed via SMS, you can also check your eligibility for a pre-approved credit increase offer through net banking or by contacting the customer care of your respective bank.
The cash limit is the amount included in the credit limit assigned to your card account that can be withdrawn as cash.
You can make transactions up to your credit limit, but you may not be able to exceed it, particularly if you haven't opted into having over-limit transactions processed.
Your credit card issuer determines your credit limit when you first apply for the credit card. They will assess your income, current debt level, and credit history and set a credit limit based on these factors.
If your transaction is not declined, you will be charged an over-limit fee.
There could be many reasons why your credit limit increase may have been denied. Many such reasons include low income, decreased utilisation of credit cards or default payments.
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