The credit limit forms the financial scope of a credit card and is therefore one of the most important basic services of the means of payment. Here you can find out what conditions are associated with this “limit” and what needs to be considered. see http://senbernar.com/2017/12/08/online-title-loans-no-inspection-get-auto-title-loans-online-here/ for further notes
What is a credit limit?
A credit is granted for classic credit cards, in technical terms this is the credit limit. So you can go shopping without a credit card.
A credit card with no limit has an infinite limit. Theoretically, the owner could buy a new house with a luxury yacht. This example shows why restrictions are necessary: a limit is needed to avoid over-indebtedness. Otherwise a shopping tour could turn out to be a financial disaster. Some customers feel restricted by the availability limit. But it is a protective mechanism for both sides. The consumer cannot go into horrendous debt while the bank has financial security.
The customer enters into a repayment agreement with his bank. This is usually done in monthly installments in the form of a credit card statement. They are set either as a percentage or as a fixed amount. So you can pay for an expensive new purchase over several months. Alternatively, the total amount will be debited from the current account at the end of the month. Some banks request the amount within a week.
Availability limits: advantages and disadvantages
With a prepaid credit card, you have to deposit the money in advance. Only the credit that is on the card is available. The availability limit makes your life easier: All payments are debited directly from the checking account. This way you don’t have to constantly make fresh money. The amount of the credit limit depends on the creditworthiness. Of course, you can limit the height for security reasons. A credit facility has a negative impact on the limit amount.
Example: The available limit is 3,000 USD. Now you take 400 USD from the overdraft facility. That lowers the frame to 2,600 USD. As soon as the 400 USD have been paid, the full amount is available.
Some banks offer additional card credit. If the limit is not sufficient, you can make a deposit. This allows the availability limit to be increased. With an expensive purchase, this option is an important advantage. Some customers receive a low credit card limit of 500 to 1,000 USD. In this case, credit card credit is highly recommended. Usually, three monthly net salaries are used to calculate the card limit.
A credit card with a credit limit will only be issued if the Credit Bureau is positive. The bank does not want to take any risks because the customer can get into debt. With a low income, a credit line is almost impossible. In a way, this serves to protect the customer. As a consumer, you should keep your payments in mind so as not to experience a financial surprise at the end of the month.
How can the card limit be increased?
A credit card can often be used to increase the available credit card. However, there are good reasons for this: Reliable customers have hardly any problems with a limit increase. Those who earn more can also apply. When a vacation is coming up, the bank can talk to you. The increase is granted in goodwill in many cases.
What costs can arise?
No fees are charged for the available limit. The banks charge indirect costs such as increased annual fees. The most expensive are credit cards with no limit. Sometimes interest is charged on the credit line. Here you should not push the limit to the last cent. Fortunately, this is rare.
Depending on the credit card, you do not have to pay interest for up to 8 weeks. Avoid offers that incur fees a few days later. If there is insufficient credit in the checking account, further interest is due.
Other expenses depend on the card provider. Some charge cash withdrawal fees, others charge partner card costs. Think about whether you need services like insurance.
Example: Germany credit card Classic
The Germany credit card is issued by Hanseatic Bank with PaySol. The customer does not have to pay annual fees. This is a huge advantage compared to similar offers.
The following conditions apply:
- real visa card
- permanently no annual fees
- up to 4 weeks free of interest
- New customers receive a limit of up to 2,500 USD
- 16.9% APR
- Cash fee of 3.00% (at least 5 USD)
- Discounts from partners
The credit limit is one of the most useful basic services of a credit card and for many people it is the decisive advantage over other means of payment. Those who travel frequently can make spontaneous payments. This is important when booking a rental car. A prepaid credit card involves a lot more effort. Each amount of money must be loaded separately. With a credit card with a limit, you have to keep an eye on the expenses.
|Other credit cards (additional) services|
|Car rental insurance|
|Airport lounge access|
|Contactless payment (NFC)|