According to a TransUnion CIBIL survey held in 2017, about 78% of credit card users pay off the bill in full, contributing to an all-time low delinquency rate in India. The survey also indicates that as much as 92% of Indian credit card users pay more than a minimum amount due.
The above-mentioned data indicates the healthy payment habits of borrowers. With such healthy repayment habits, financial credibility of customers is increased, and they become eligible for increased credit. Hence, opting to upgrade credit card can be a convenient option for them.
Nevertheless, this is not the case always as borrowers end up making wrong financial decisions because of a lack of knowledge about the right time to upgrade and how to acquire benefits from the upgrade.
When to upgrade to a higher limit credit card?
Most lenders scrutinise credit profile meticulously before approving an upgrade, and hence customers should first make sure that they qualify for the upgrade. Hence, looking for the right time for upgrading of credit cards is necessary.
- Minimum spend requirement
Often, credit card lenders specify a minimum value that the customer must spend using their card to ensure they receive a substantial reward. In case one doesn’t have a big purchase coming up, they would struggle meeting the requirement and opting for an upgrade here won’t be much beneficial.
- Cards earning capability
Earning capability is related to the rewards offered by the credit card. By upgrading to the right card, one can maximise the reward points and offers available to them. Hence, consider going for an upgrade when the card’s earning capability is high. With cards like Bajaj Finserv RBL Bank SuperCard, one can save up to Rs.55,000 annually.
- Changed Spending habit of users
In case the customer’s spending habits have changed, and the option to upgrade a credit card offers customers with benefits that match their evolved spending habits, it’s a wise decision to avail an upgrade.
- Growth in income
Most customers opt for an upgrade when there is a growth in income as they can repay more for their borrowings. Hence, they can maximise benefits by choosing the right credit card for themselves once there is income growth.
- Hefty welcome bonus
Individuals can avail hefty welcome bonus with premium credit cards. If that’s the case, one should go for an upgrade.
- Lowered interest rate
If an upgrade is offering customers a card which applies lowered interest rate, they will be able to improve their financial conditions with it. With the upgrade, customers will be able to reduce credit card interest payments substantially.
- Healthy CIBIL score
Qualifying to upgrade credit card is possible only with a decent CIBIL score. Consequently, customers should opt for it when they have built a strong credit profile.
- Financial requirement
Upgradation to a higher limit card also increases the annual fee and other associated charges. Hence, borrowers shouldn’t opt for an upgrade if they don’t need finances in the first place.
- Credit utilisation ratio
Customers can consider an up-gradation of their credit cards if they can’t keep credit utilisation below 60%. However, they should also consider other factors before they upgrade to one.
Other considerations
Apart from above, few other credit card features like cash withdrawal facility; emergency loans, etc. aren’t available with all cards. Therefore, if one has a card that doesn’t offer these features, considering for upgrade can be beneficial for them. Customers will be able to avail loans from the unutilised credit limit available to them.
Further, non-banking financial companies like Bajaj Finserv simplifies the credit application procedure for existing customers with their pre-approved offers. Such offers are available on multiple secured as well as unsecured financial products such as home loans, personal loans, business loans, etc. Customers can check pre-approved offers instantly by inputting their name and contact number.
Even with upgrades, they must know how to use a credit card wisely so that they can make the most of the available credits. Keeping the above pointers will help users understand when upgrading is feasible.
