The Basics of Credit Card Upgrading

Credit cards, when used responsibly, can have a number of advantages. Besides, they are really easy to get as there is minimum paperwork and no collateral requirement as opposed to personal loans. That said, there are times when you may want to get more and upgrade your “basic” credit card. This can be done in two manners-

• By getting a credit card that offers more features
• By increasing your credit card limit

Credit Card with New Features

One of the best ways to upgrade your credit card is to get a co-branded credit card. These credit cards are offered by a credit card company and a business/brand as a joint product. Some examples include HDFC Snapdeal Credit Card, Yatra SBI credit card, IRCTC SBI Platinum Credit Card, etc.

Co-branded credit cards are great if used correctly. For instance, if you like to shop online a lot, then you can get HDFC Snapdeal credit card which allows you to get special discounts and other benefits. Similarly, if you travel frequently via flight, then you can get Jet Airways ICICI Bank credit card that offers benefits like insurance cover, excess baggage allowance, etc.

Increased Credit Card Limit

Even if you are you are happy with your current credit card, there are advantages of increasing its credit limit, such as:

• Improved credit score: Your credit score is greatly affected by your credit utilization. So, if you are spending around Rs. 40,000 a month with a credit card that has a Rs. 1 lakh limit, then your utilization is 40% which is quite high. However, if you can increase the limit to Rs. 2 lakhs, then the utilization drops to only 20% which is much better for your credit score.
• Interest rate benefit: If your credit card limit is not high enough and you have to take small personal loans every now and then, then it could be a good idea to increase the credit card limit instead. This is especially good if the interest rate on the loan is higher than that on the card.
• Financial security: Having a high credit card limit is good for financial security too as you won’t have to worry about arranging for funds in a future emergency.

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