A life without any limits is what we dream of, but in some cases, setting a limit is actually a good thing. Think about your bike's speed limit; it ensures a safe ride. Similarly, limited credit is essential to ensure a financially secure life.
How to set limit on your credit card limit?
Yes, there is a credit limit set by the bank that represents the maximum amount that you can utilize. You should go a step beyond and set a credit limit on your credit card spending so you can build a good credit score.
Understand your spending habit
Credit cards are known for their reward points and cashback offers. However, you may end up spending more than your budget. It is good to know the fundamentals of budgeting and setting goals. Always use your credit card responsibly to enjoy all its benefits and build a good credit score.
Set up credit card spending alerts
Mobile apps and internet banking are the easiest ways to track credit cards spends. You can use your banking app to set alerts for when spending or purchasing exceeds a certain amount.
If you’re a Kotak811 credit card holder, you can use the Kotak mobile banking app to track your credit card spends in the easiest way. You can also set up alerts to notify you about your credit balance and payments.
Benefits of setting up spending limits
A defined spending limit will not only help you to stay within your budget, but it will also help you to take care of your finances.
A different way of thinking is helpful when we are trying to deal with spends. You can set a monthly limit on the amount you will spend on takeout orders. Set up trigger alerts when you reach 90% of your set limit. This will force you to spend less on food orders and save more.
Kotak811 offers Zero Balance Account Opening Online using video KYC.
Reduce credit utilization
Credit utilization is calculated by determining how much of your total available credit you are currently using. It is always suggested to keep your credit utilization below 30%. A self-imposed credit limit will help you to stay below the credit utilization rate. A good credit utilization record justifies you as a credit-worthy borrower in front of lenders. Over utilization of credit marks you as a credit hungry borrower, and you might face issues while trying to apply for a credit card.
Save to pay back your credit card bills
You can open a secondary savings account and save extra money lying idle in that account. Later, you can use the saved amount to payback your credit card bills. A zero balance savings account is ideal for such a purpose. You don’t have to maintain a minimum average balance in the account at all times, and the bank provides interest on the entire amount saved in the account. Kotak811 offers a digital zero balance savings account. The digital savings account can be opened online within minutes. The account is also loaded with multiple other features.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.