It's a dilemma for most of us when it comes to using credit cards. We know that we can use it to purchase goods and services, but how much of our credit card limit should we use? Should we use 100% of our credit card limit? The answer is not straightforward. It depends on a variety of factors, including your financial situation, your credit score, and your spending habits. Here, we'll look at the pros and cons of using 100% of your credit card limit, as well as the Card Protection Plan (CPP), which is available in India.
Pros of Using 100% of Your Credit Card Limit
The most obvious benefit of using 100% of your credit card limit is that it can help you build up your credit score. By using your credit card to make regular purchases, you're showing lenders that you're able to manage your finances responsibly. This can have a positive impact on your credit score. Another advantage of using your full credit card limit is that it can provide you with greater financial flexibility. By having a higher limit, you're able to make larger purchases without having to dip into your savings or take out additional credit.
Cons of Using 100% of Your Credit Card Limit
The downside of using your full credit card limit is that it can be difficult to pay off the balance in full each month. If you're unable to make the minimum payments, you'll be charged interest on the balance, which can quickly add up. It's also important to keep in mind that using 100% of your credit card limit can have a negative impact on your credit score. If you're using a high proportion of your credit limit, it can look like you're struggling to manage your finances, which could lead to lenders rejecting any applications for additional credit.
Card Protection Plan (CPP) in India
If you're using 100% of your credit card limit, it's worth considering a Card Protection Plan (CPP). CPP is a comprehensive insurance plan that covers you in the event of the loss or theft of your credit card. It also covers you for fraudulent transactions as well as providing assistance if your card is lost or stolen abroad. CPP is an invaluable safeguard for anyone who regularly uses their credit card. It ensures that you're protected from any unexpected losses or expenses, as well as providing peace of mind that your finances are secure.