How RBI's New Credit Card Regulations Affect Your Limit and Credit Score
By Lokmat English Desk | Updated: August 27, 2024 18:15 IST2024-08-27T18:15:14+5:302024-08-27T18:15:14+5:30
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Due to the attractive features that come with credit cards, their usage is steadily increasing. However, many credit card users are unaware of some important aspects of these cards. For instance, if you have a credit card with a limit of Rs 1 lakh and you have already transacted Rs 80,000, you may find yourself in a situation where you need to make a payment of Rs 1 lakh.
This raises a crucial question: can you pay a bill of Rs 80,000 and then complete a transaction of Rs 1 lakh again? This question is particularly relevant in light of the Reserve Bank of India's new credit reporting norms.
Experts indicate that currently, your card limit is restored shortly after you pay your credit card bill. This means you can utilize your full limit again, but only after a brief period following the payment. Additionally, it is possible to transact beyond your limit even if you haven't paid the entire bill within a billing cycle, although this will incur a charge.
If you find yourself needing to exceed your limit, you can contact your bank regarding the possibility of an over-limit transaction. For example, if your card issuer charges 2.5 percent on the over-limit amount, with a minimum fee of Rs 500, this charge can be applied once during a billing cycle.
It’s advisable to speak with your bank or card issuer to clarify whether over-limit transactions are permitted on your card and to understand the associated fees. You may also consider applying for an increase in your card limit. Furthermore, banks are now required to report your credit habits to the Credit Information Bureau (India) Limited (CIBIL) or Experian. Previously, banks provided records on a monthly basis, but now your credit score can fluctuate throughout the month based on your credit activity.
So, what affects your credit score? If you've utilized 80 percent of your card limit, it may slightly lower your credit score. However, if you pay your bill before the end of the billing cycle and before the bill is generated, it won’t have a significant impact on your score.
