The limit till which a user can use the Credit Card is its Credit Limit. In simpler terms, a credit card comes with a credit limit up to which the user can withdraw the money for their usage. This limit is decided by the bank and is different for every cardholder. The credit limit for every credit card is determined based on the applicant’s salary, Credit score, and credit history.
Apparently without a salary and some other basic documents, you cannot own an unsecured credit card with SBI Bank. There are secured credit cards as well which one can obtain by opening a Fixed Deposit with the bank. With secured types of credit cards, the credit limit is determined based on the amount of FD.
How is the Credit Limit determined?
Certain factors help banks in determining the credit limit when you apply for a credit card. Those factors are –
∙Income and Age of the applicant are the major pointers towards the eligibility criteria of any
credit card.
∙KYC details of the applicant.
∙Employment status (secured or unsecured)
∙Any current debts or loans
∙History of loan repayment (if any)
∙Current Credit score in the applicant’s name.
The information present by these factors alone is enough to build your repo in front of the bank and after that only they approve and reject the application and then assess the credit limit criteria. Furthermore, there are many things with which people get confused about. Mostly the question arises with the Credit Limit if the limit will renew every month. Or what is the Total Credit Limit and
Available Credit Limit?
There is no monthly credit limit. Once you have utilized the credit cards and have received the credit card bill for the same, you will have to make the full payment to refresh the credit.
How are Total Credit Limit and Available Credit Limit Different?
The total credit limit and remaining credit limit are certainly different from one another because one is decided by the bank the other depends on the amount the user is left with after making the expenses.
Total Credit Limit – Total credit limit means the total amount which was given by the bank to its user. This amount is decided by the bank itself and is subject to change according to the eligibility of every customer.
Available Credit Limit – Available credit limit is the amount the user is left with after making all their expenses. After spending the amount on necessary things, the remaining amount becomes the available credit limit which gets renewed or used depending on how the monthly bill has been paid.
The Credit Limit is the limit provided by the banks on every credit card. This limit is different for every customer. The credit limit is determined by the bank itself depending on a few factors which can help the bank evaluate the creditworthiness of the user. The credit limit is not a monthly limit and gets renewed only after the monthly bills have been paid in full.