Normally the bank or building society will determine your borrowing limit by taking several things into consideration


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February 27, 2022

Normally the bank or building society will determine your borrowing limit by taking several things into consideration

The maximum amount that you can borrow will vary from person to person. The most important factor in their final decision will most likely be your current credit rating. This means that the better your record at meeting your past loan repayments, the more likely it is that you will be able to borrow more money. The maximum amount that you are allowed to spend on your credit card is known as your credit limit.

If you are given a credit limit that is too low for you to be able to achieve exactly what you wanted to with the money, there is no reason why you can’t go out and apply for another similar card to use alongside your present one

The first thing you should do, if you have decided that you want to apply for this type of credit card, is have a look at the criteria that you need to meet in order to be accepted for it. Only once you have done this, should you consider applying. As we have said, being rejected for a credit card or loan will have a negative effect on your credit rating and therefore should only be done when you have a reasonable level of confidence that you will be successful in your attempts. Another thing that you should definitely avoid doing is applying for too many different types of credit card all at once. This too will have a negative effect on your credit rating and will make it harder for you to take out other forms of credit in the future. When you do apply for a credit card, you should make sure that it is offering a 0% rate of interest for an introductory period. It is also extremely important that you ensure that this 0% interest is offered on new purchases and not just on balance transfers- otherwise you could end up having to pay much more to borrow money than you initially thought.

Once you have been accepted onto a credit card that meets the above criteria, your bank or building society will set you a credit limit- unfortunately there is no way of knowing exactly what your credit limit will be before you apply, although you may be able to get a rough idea. However, you should make sure that you don’t apply for too many as this will have a negative impact on your credit rating and may make it harder for you to take out other loans or credit in the future.

As we have said, this varies from person to person but generally speaking your credit limit should be somewhere in the vicinity of ?5,000

Once you have received your credit limit and you have your new credit card, all you need to do is start spending and making the necessary purchases on the card. It is important that you make all of your repayments by the end of the 0% introductory interest period, otherwise you will end up being charged payday loans Gahanna Ohio a lot more than you would have been before. It is important to note that most of these credit cards have a minimum monthly repayment figure of 2% of the total outstanding balance on the card. It is important that you at least make these repayments but it is also crucial to remember that you should be paying back more than this if you want to clear all of you debt before the introductory period is over. If you are coming towards the end of your introductory period and you think that is unlikely that you will pay off the outstanding balance before the 0% rate is raised, then you should start looking around for a cheap balance transfer credit card. These cards allow you to move your money across to them at not too great a cost and will almost certainly be cheaper than your current card will be once the introductory offer is over. Most of the credit cards which offer 0% interest for long introductory periods will boost the interest up a lot after this time finishes. Many cards will hike the interest rates up to about 15 or 20% once the free term is over. This is why it is important to get onto a different card before this happens.

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