What effect will the new rules of RBI have on your credit card limit, what will be the credit score? Know the details
New Delhi| Due to the great features available with credit cards, its use is continuously increasing. But there is no doubt that most of the people using credit cards are unaware of some of its most important features. If you have a credit card with a limit of Rs 1 lakh, with which you have transacted Rs 80,000. Now suddenly you have an important task and now you have to transact the entire Rs 1 lakh. In such a situation, can you make a transaction of Rs 1 lakh again by paying a bill of Rs 80,000. This becomes a very important question under the new credit reporting rules of RBI. According to experts, at present the limit of your card is restored shortly after paying the credit card bill, that is, you can use its entire limit shortly after paying the bill. Not only this, even if you do not pay the entire card bill within a billing cycle, you can still make more transactions than the limit. However, for this you will have to charge.
Suppose, a card issuer charges 2.5% of the over limit amount with a minimum fee of 500. This charge can be levied once on the billing cycle. You can talk to your bank or card issuing company to understand the process, whether over limit transactions are allowed on your card and if so, how much you will have to charge for it. Apart from this, you can also apply to increase the limit of your card. The bank will now have to report your credit habits to Credit Information Bureau (India) Limited (CIBIL) or Experian, whereas earlier the bank used to provide records of old monthly frequency. This means that your credit score may potentially fluctuate over the course of a month, which was not the case earlier. Let’s say, you’ve used up 80 percent of your card limit, which can lower your credit score a little bit. But if you want to pay the bill before the billing cycle ends and the bill is generated, it will not have any significant impact on your score.