Line of Credit

the line of creditThe line of credit is the amount of available funds that the bank is ready to provide the client with. The line of credit is nothing more than the maximum amount within which the bank is ready to approve a loan for a client. Simply put, this is the limit within which the credit institution trusts you with money.

The credit card limit is resumed. You return the money to the bank, and it offers you money again. That is, having issued a loan once, you can use it many times.

The amount of funds on a credit card depends on your ability to pay, type of card and credit history. The minimum line size may be $1,000, but the market average limit is set at the level of $2,000. The maximum size of the credit line can reach several million dollars. Most often, banks adhere to a simple rule – the maximum credit limit should not exceed 3-5 average monthly salaries.

Credit line amount

The amount of the line is recorded in the agreement. It is also discussed with the client upon reception of the credit card. But this does not mean at all that the credit line cannot be changed. So, if you suddenly make a repeated payment delay, then the bank may refuse you in subsequent borrowings or reduce them. But, as practice shows, such a measure is taken very rarely.

Much more often banks prefer, on the contrary, to increase the line of credit. So, after 3-6 months (in more rare cases, 1 month), careful following of payment discipline and active use of borrowed funds to pay for goods and services, the bank may increase the initially approved line. On average in the market, the growth in the size of the credit limit is 20-25%, and sometimes – 50-100%.

Increasing the credit line

There are two options for increasing the line of credit:

  • at the request of the client;
  • at the decision of the bank, which then notifies a client about.

After changing the remaining balance, the credit organization calculates a new payment schedule and the full cost of the loan, and then notifies you about this. In this case, you can always refuse to icrease it by applying for this with an application to the bank. Sometimes the line of credit can be resumed when the card is reissued, but more often bankers do not bind this increase in the line of credit to any specific events.