Due to the corona crisis, there have been many challenges in the lives of common people. One of the biggest crises in this is related to cash.
Data on withdrawals from provident fund pf funds shows that people are struggling with a lack of money. However, all efforts have been made by the reserve bank to overcome this crisis., For example, the process of taking loans has been simplified by cutting interest rates. Similarly, people who pay the monthly installment of the loan have been given the option of 3 months moratorium. Amidst all this, banks have started reducing the credit card limit of customers, although some banks launched promos that compensate for this like the HDFC Smartbuy offer. Some of the country’s private banks have reduced the credit card limit of customers of different categories by up to 80 percent.
What do the experts say?
Adil Shetty, CEO of bankbazaar.com, said this is not the first time this is happening. Credit card limits have been reduced before. But due to the increase in the covid-19 crisis, this time the banks are looking more alert. He said that banks keep increasing or decreasing the credit card limit based on the earnings, cibil score, and payment history of the customers. But in the current situation, the reduction of the limit has shocked the customers.
What’s the reason?
According to the report, for customers who are taking advantage of a three-month moratorium from payment on loans, the credit card limit for customers is being reduced. Banks believe that such customers will be short of money. In this situation, the customer will use the credit card to meet the financial needs and the payment will be delayed. Similarly, the limit for customers using fewer credit cards is also being cut.
What should you do?
According to expert Adil Shetty, if you have to maintain the limit of the credit card, then pay on time along with spending the card money. If you have been paying on time for a few months with more than 50 percent of the amount spent, then there will never be a crisis on your credit limit. This will also keep your cibil score correct.
Adil Shetty said that the cibil score should be checked from time to time. If you feel a mistake, check the reasons. Adil Shetty advises you to try to pay the credit card dues as much as possible. By doing this, the bank may increase the limit of your credit card.
A credit card is also exempted.
Let us know that at the behest of the central reserve bank, banks have been given a 3-month moratorium on credit card payments in addition to loans. This means that if you do not pay for a credit card for 3 months, there will be no pressure from the banks and there will be no impact on the cibil score.
Advantages or disadvantages of not making payments
Credit cardholders should still make the payment on time, this will save them a lot. Because if the customer does not pay the card for three months, then in the fourth month, the amount of the last three months, as well as the interest, will have to be paid. The bank charges an interest rate on credit cards arbitrarily, which can be up to 40 percent. In such a situation the customer will be caught in the trap of interest. The good and better option is to deposit the credit card bill only on time.