Difference between upgrading your credit card and increasing your credit card limit

There is a striking difference between the two. Read on to find out.
Difference between upgrading your credit card and increasing your credit card limit
4 min read
25 July 2023

Using a credit card instead of cash or debit can be advantageous for the added rewards that come along. Over time, you may even wish to upgrade your credit card, but this does not mean that can you avail an increased limit.

Credit card upgrade and credit limit increase may seem similar but there is a big difference.

Here is what a credit card upgrade mean

Upgrading a credit card means upgrading from a credit card with basic rewards to a premium card that may offer added benefits. The upgrades can come with improved rewards programs, higher cashback, additional perks like complimentary airport lounge access, flight upgrades, accelerated points online spending, emergency cash advances, and the likes.

Who gets the upgrades

Conventionally, a card issuer might offer a card upgrade if you have a credit card from them already. The card issuer has a few criteria which include the repayment history of your current credit card, credit utilisation ratio, credit score, and your income profile amongst.

For instance, you are a proud owner of a Bajaj Finserv DBS Bank 5X Rewards Credit card, but you might want to upgrade your card to the Bajaj Finserv DBS Bank 10X Signature Credit Card which offers more benefits such as 20X cash points, 40% discount on OTT subscriptions, and more. All you need to do is, apply for the upgraded card. Once you have applied DBS Bank will review your application and offer an upgrade based on the factors mentioned.

Here is what a card limit increase mean

Increasing your credit limit simply means increasing the maximum amount you can spend using your credit card. This increase in credit limit is determined by your issuers based on your creditworthiness including your repayment history and CIBIL Score.

The credit limit increase might come in handy in emergency situations while it also increased your purchasing power. But it is essential to keep in mind that the limit increase is not an opportunity to overspend beyond your financial capacity.

Here’s how your credit card limit is decided.

In conclusion, upgrading your credit card and increasing your credit limit both have their benefits and drawbacks. The decision should fit your needs, lifestyle, usage, and financial capacity. Evaluate your options and avoid falling into debt by over utilising the card.

Disclaimer: Card upgrades and increase in limit are at issuer’s discretion.

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