A credit card is currently a popular means of payment. Its purpose is to provide the bank with funds to the client within a certain limit in accordance with the terms of the agreement concluded between the bank and the client. Such an agreement is concluded for a period of one to five years.
The credit limit is exactly the amount of money that is on the card, and which the client can spend at his own discretion. The amount is limited by the bank in order to reduce the risk of non-return of the funds provided.
The credit limit is always expressed in monetary terms.
The credit limit can be either non-revolving or revolving. In the first case, the amount of credit funds after repayment of the debt becomes unavailable for further use (i.e. the loan is provided once). In the second case, on the contrary, credit funds will be available again and again, i.e. the loan is provided repeatedly (after repayment of the debt, these funds can be used again if necessary).
Depending on the exact amount the bank provides, there are 3 types of credit limits:
1. Zero credit limit. In this case, there are no funds on the card, because the bank has not yet calculated the amount of a possible loan. To start using such a card, you need to contact the bank, which, after considering the application (taking into account the client’s income level), will change the balance amount.
2. Minimum credit limit. Provided at the very beginning of cooperation with the bank. Proof of solvency is not required. Such a limit is often issued to clients with either bad or zero credit history. The amount of available funds is small (from one to five thousand rubles).
3. Maximum credit limit. The amount of available funds on the card can vary from several hundred thousand to several million. This limit is available only for a limited number of clients with a high confirmed income level, ideal credit history, as well as for corporate clients.
The credit limit depends on a combination of several factors:
– disposable income;
– the number of loans and credit cards already available;
– credit history, etc.
The limit is calculated for each client individually. In addition, the limit can be changed both upward and downward.