What is the validity period of the credit limit? What is a credit limit

The terms and expressions used by banks that are used when issuing credit cards are incomprehensible or unfamiliar to some people, and sometimes even mysterious. But everyone wants to understand this, so the material contains most of the terms and expressions associated with credit cards. This will help guide those who decide to use a bank credit card for the first time.

And this is what came out of it:

Credit card

A credit card is a type of bank plastic card that is linked to a personal bank account, to which the bank opens a credit line to a client without collateral and guarantees. Getting a credit card is more difficult than getting a debit card, since issuing a credit card means taking out a loan. The client has to fill out a questionnaire, according to which the bank determines the solvency of the credit card applicant.

As a rule, a commercial bank credit card is issued for a consumer loan for any urgent needs of the client. This is the simplest option for obtaining a loan and the initial amount for such a loan, as a rule, is not very large.

Some banks practice issuing a credit card as part of an agreement for targeted consumer lending, for example, when applying for a loan for the purchase of household appliances. The loan agreement specifies the conditions for issuing a credit card and the entire mechanism for its transfer to the client, for example, after the full repayment of the first loan. Often there are situations when a person, receiving a credit card by mail, is indignant, believing that the bank simply imposes a card on him, and he allegedly did not ask for it at all. And in order not to get into such an awkward situation, carefully read all the conditions of any loan agreements you sign.

Credit line

A credit line is a legally executed obligation of a bank to a borrower to provide him with loans within certain limits within a certain period. The term of the credit line is tied to the term for which the credit card is issued, which is generally 1 to 3 years. A certain limit on the size of the credit line is set in the form of a credit limit.

Credit lines can be revolving or non-revolving. When lending through credit cards, revolving credit lines are mainly used.

Credit limit (credit limit)

Lending limit (credit limit) is the maximum loan amount set by the bank for each client individually, but it cannot exceed the total lending limit set by the bank's tariff plans (conditions) for each particular type of credit card.

The individual lending limit (credit limit) is determined by the bank for each borrower based on the individual solvency of the client and the conditions of the bank. The size of the established credit limit is reported to the client after the issuance of the credit card, and can be changed by the bank unilaterally.

Changes in the lending limit are made in the following cases: - upwards, at the request of the client due to an increase in his average monthly income or at the initiative of the bank, if the initial lending limit was set less than the calculated amount; - downward, if the client violates the procedure and amount of repayment of the loan. The bank sends information about changing the credit limit to the client by postal, telephone or other communication.

So, the credit limit is the amount within which the client can use the bank's funds to make purchases and withdraw cash using a credit card. During the validity period of the card, the client can repeatedly use the loan within the available balance of the credit limit - mastering the loan, then repaying it and mastering it again.

Remaining credit limit

The balance of the limit is the amount of money within which the client can carry out debit transactions at the expense of the bank loan provided through the credit card and for the first time it appears at the time of activation of the credit card.

The balance of the credit limit is the positive difference between the amount of the credit limit set by the bank and the actual debt on the loan (within the amount under the agreement).

The available balance of the credit limit is the amount that the client can still use with the credit card and represents the difference between the credit limit and the amount of the current debt to the Bank. The available balance of the credit limit arises after partial use of the loan, after full or partial repayment of the loan ahead of schedule, after payment of the minimum mandatory payment, etc.

What is "PIN - code" or abbreviated "PIN"?

A PIN code is a personal identification number consisting of a number of numbers or letters determined by the bank. It is transmitted by the issuing bank to the holder of the payment card and is a secret code (password). As a rule, a personal identification number contains from 4 to 12 characters.

It is issued to the client in a sealed and darkened envelope at the time of receipt of a bank card (credit or debit).
Personal Identification Number (PIN) is the secret code of your card, so it must be kept secret. It must not be stored with the card, it must not be disclosed to third parties, including relatives, acquaintances, employees of a credit institution, cashiers and persons advising you at the time of the transaction through an ATM using a bank card.

What is the PIN code for? It is needed to identify (verify) the cardholder, it is akin to your electronic signature. With the help of a PIN code, the client gains access to his account. The PIN code is entered when withdrawing cash from ATMs, at cash points, at retail outlets to pay for goods and services, and when making non-cash payments for goods and services via the Internet.

Some banks practice imposing their loans by sending a potential borrower a credit card and a PIN code via mail in two simple envelopes. In one - a PIN code, in the other a credit card. With this method of transfer, the risk of fraud in the form of withdrawals before handing over the credit card and PIN to the customer is very high. When choosing a bank for issuing a credit card, this important point must be taken into account. The temptation to activate the card and take the offered loan (cash) is always very strong, which is what this service is based on. But "free cheese is only in a mousetrap," so you should keep in mind that such loans have a very high interest rate.

What is card activation?

Activation is a procedure for canceling the technical restriction established by the Bank when issuing a credit card for the client to make transactions using the card. A technical restriction is understood as the unconditional provision of negative authorization responses to transactions using a credit card, regardless of the state of the available balance of the credit limit on the card, or any other conditions. Credit card activation is carried out by the client.

How to activate the card? For security reasons, the credit card is inactive at the time of receipt, i.e. before the client can use the credit limit, the credit card must be activated. To do this, you just need to perform any operation using a PIN code.

It is most convenient to activate the card through an ATM. To activate the card, you need to insert it into an ATM, enter a PIN code and perform any operation, for example, “Request balance”, “Cash withdrawal”. After that, the credit card will become active and you will be able to use the credit limit. You can also activate your credit card at ATMs of other banks.

The card can also be activated by contacting the 24-hour service of the bank's card center using the phone numbers reported to the client, or at any bank cash desk, whose employee activates your credit card through a terminal with a PIN code input module.

What is Authorization?

A credit card authorization is an encoded request from a clearing house or credit card issuer that authorizes a transaction or payment on request from a given credit card.

This procedure for confirmation by the Bank of the Client's right to make transactions using the card consists of two operations in one:

an electronic request to use a credit card for a transaction (to pay for goods through a terminal or to withdraw cash from an ATM).

obtaining permission - to pay for goods or withdraw cash from an ATM.

Based on the results of an electronic request, the Bank can provide the following answers:

Positive response - confirmation by the Bank of the relevant right of the Client to use the requested amount, and granting permission to conduct the Operation;

Negative answer - the Bank does not confirm the relevant right of the Client and does not provide permission to conduct the operation.

A refusal to authorize a card may be issued in the following cases:

There is no connection with the issuing bank. You can try to make a payment later, perhaps the connection will be restored.

There is no credit limit balance available.

You entered the wrong PIN for your credit card at an ATM.

Etc.

Minimum required credit card payment

The minimum mandatory payment is the amount of funds transferred by the client to repay the loan. Payment of the minimum mandatory payment confirms the client's right to further use of the credit card. The amount of the minimum payment and the deadline for its payment are indicated in the invoice, which is sent monthly by the bank to the address specified in the agreement.

The amount of the minimum mandatory payment includes:

the minimum part of the loan, set in accordance with the tariff plans of the bank for credit cards. So, in a number of banks, the minimum part of the loan is up to 5% of the credit limit set for the client on a credit card. If the client is going to repay the loan faster, then it is necessary to increase the payment amount;

the amount of interest accrued on the actual loan amount for the past billing period (month);

the sum of all commissions and other payments due in the past billing period, in accordance with the credit card tariff plan. All tariffs for commissions and other payments must be specified in the loan agreement;

the amount of penalties and forfeits if there are delays in repayment of the minimum mandatory payments for previous settlement periods or other violations of the lending procedure stipulated by the agreement;

The minimum payment is calculated monthly on the Settlement Day.

If the client has made another payment in the amount of the minimum payment or in an amount less than the minimum mandatory payment, then the bank will first of all pay off penalties and penalties from the amount received, then interest and commissions. And the loan itself is repaid last. on a residual basis. And delays in payments can lead to an increase in the amount of fines and penalties and punishment in the form of a reduction in the lending limit or even suspension of further lending.

Can I pay more than the Minimum Payment? You can't, but you have to pay more than the minimum payment. You can deposit any amount of your choice up to 100% of the used credit. In this case, the amount of repayment of the loan itself will increase. Yes, and the available credit limit will be restored by the amount of the principal debt paid.

In addition, do not forget to officially, by registered mail, notify the bank of all changes in the details of the borrower under the agreement (change of registration or residential address, changes in full name, phone number, etc.) during the entire lending period. This will help to avoid problems with the delivery of invoices for payment, problems with the loss of a credit card, etc.

What is a questionnaire?

The Questionnaire is a document filled out and signed by the client, which contains all the data required by the bank about the client. According to the rules of individual banks, the questionnaire can be considered as an independent document. The loan application is one of the documents on the basis of which the bank makes a decision on setting a lending limit. Before making a decision, the bank analyzes and checks the questionnaire data.

What is a grace period for loans?

Grace (interest-free) loan period is a period of time during which you can make purchases, pay for services using your credit card and not pay interest, subject to timely repayment of all debt on the loan.

Grace (interest-free) lending period, which is established by banks, involves additional attraction of customers for lending. In most cases, it is set by banks for a period of 30 to 50 days.

The grace period of crediting consists of the billing period + the payment period. The calculation of the grace period can be considered with an example. So, if the credit card is activated, for example, on June 5, then from June 5 to July 4 there will be a billing period (the period for disbursing the loan), and from July 5 to July 24 inclusive, there will be a payment period (the period of settlements with the bank for the loan). In order for the bank to apply the grace period for lending, it is necessary to pay all the debt on the loan by July 24.

Credit limit is one of the key terms used in the field of lending. It denotes the amount to be issued to the borrower in debt at a fixed percentage. It shows how much cash they can give you, or how much will be transferred to a credit card account. The size of the credit limit is set by the lender based on information about the client's income and loan terms.

Credit Limit Calculation

The determination of the amount that the borrower can receive is made taking into account information about his solvency. The bank analyzes the data provided in order to calculate the maximum available loan amount. The estimated loan amount, together with is divided by the term of the loan. The result obtained is compared with the monthly salary of the client. If the value is more than 40% of the income, then the credit limit is reduced.

But it can be increased by additional security (pledge or guarantee). So, when determining the mortgage limit, the bank takes into account not only the person's earnings, but also the value of the acquired property, which is used as collateral. The amount is usually set within 20-30% of this cost. When calculating the limit on the card, the lender mainly relies only on the amount of salary for 3-5 months. and the status of the requested credit card.

Types and principles of the limit

Distinguish between renewable and non-renewable limits. Non-revolving limits apply to consumer loans. The amount limit is set once. The borrower is obliged to repay the debt in full and close the loan.

Revolving limits apply to credit cards. The owner of a credit card can use the funds within the limit until they exhaust them. With each replenishment of the account, it is renewed again. But this principle can be violated if credit conditions are not met, for example, by missing a payment.

The amount of the loan may be revised if new circumstances arise. When a client violates one or more clauses of the contract, the limit is reduced. And they recalculate it upwards if the debtor's solvency increases, and he provides security, a maximum of documents during registration, has a good credit history.

The impact of the limit on credit relations with other banks

The value of the credit limit is of interest to all creditors for whose help you apply. The bank will certainly examine the data on your credit history. The presence of a large amount and information about the timely repayment of the debt will be a plus in assessing the borrower. If there are many open loans, including those with a revolving limit, then this will alert the lender. When calculating the available amount of borrowed funds, not only income and collateral will be taken into account, but also debts on existing loans.

How banks determine the credit limit

What does the concept of a credit limit on a card mean? In fact, this is the maximum amount of credit funds that the owner of a credit card can count on (that is, the maximum that the bank can entrust to a particular borrower).

Most credit cards have a revolving limit. This means that after the return of credit funds in a certain amount, the cardholder can reuse them. Thus, once issued a credit card can be used many times (within the limits of the credit limit and the validity period of the card).

What amount of credit funds can a client expect when applying for a credit card? First of all, it will depend on its solvency, the client's reputation in the eyes of the bank (determined by credit history), as well as the type of the card itself.

If we talk about the minimum credit limit for a card, then in some banks it can be from 1,000 rubles, and in others - from 5,000 rubles. Whereas the maximum amount of credit funds is most often determined on an individual basis, and can be calculated in millions. As a rule, when determining the maximum credit limit, banks are guided by the income of the client: for example, the maximum loan amount cannot be more than the sum of the average salary of the client for several (from 3 to 5) months.

Information about the maximum loan amount is communicated to the client when issuing a credit card, and is also displayed in the agreement. However, in the process of using, the bank may decide to change the credit limit - both in the direction of limiting and increasing the amount.

So, if the cardholder is a regular "non-payer", it is possible to limit the credit limit or refuse further lending. In fairness, it should be noted that such measures are rather rare, and much more often, as a reward for making payments on time, banks offer such customers an increase in the credit limit.

The bank can increase the maximum amount of credit funds on the card both by its own decision and at the request of the owner of the credit card. And vice versa, if the client does not want to increase the credit limit, he can write a corresponding application to the credit institution.

In some cases, the reason for the revision of the credit limit may be the reissue of the card. If the credit limit of the card has been changed, the bank is obliged to draw up a new loan repayment plan and calculate its full cost, and then notify the client about this.

Often, cardholders react positively to an increase in the credit limit, and for the most part do not refuse it. However, it will not be superfluous to remember that you still have to return the money to the bank, and having a larger amount is also a temptation to spend more.

Therefore, with all the advantages of credit cards, their use must be approached responsibly and seriously. For example, if you need a long-term loan for a significant amount, it will be much more profitable to issue a traditional consumer loan.

Almost every bank offers its customers credit cards that have a limit. The borrower can use the money and then must repay it on time. The limit is usually renewable, so the client can withdraw funds from the card again. This is very convenient because you can use the money at a convenient time. There is no need to collect documents, no need to waste extra time. But if you have a limit, it can encourage purchases that are not always needed.

About the credit limit

Credit? This is the amount of money provided by the bank to the client for permanent use. With the receipt of a banking product, it already has funds, so the borrower can withdraw cash or pay for purchases. You need to repay the debt on time to avoid unnecessary charges.

Limit sizes

The bank sets a limit depending on the solvency of the client. Here, too, wages are taken into account. If a customer has been issued a credit card, the credit limit may increase over time. This has the effect of improving solvency. Usually 50-100 thousand rubles are provided.

When the client is not solvent, the limit is denied. Settlement rules are different for each bank. As a rule, the payment should not exceed 25% of income. All expenses of the client must be taken into account. The size of the limit is affected by the ownership of real estate, cars.

Limit increase

If you have a credit card, your credit limit may be increased. Each bank calculates this differently. For example, in "VTB-24" the client submits an application, a certificate of income, a document of ownership. Consideration of the application lasts no more than 3 days, after which a decision is made.

"Binbank" independently decides to increase the amount if the client constantly uses the services and returns the money without delay. Therefore, the limit can be increased when:

providing documents;
continuous use of funds.

How to find out the credit limit?

To find out the amount of the provided amount, you can use the following options:

you should familiarize yourself with the agreement that was issued when contacting the bank;
the amount is indicated in the check from the ATM;
the client can order a bank statement;
There is a convenient Internet banking service.

Such methods are available with every card, including the "Corn" card. Euroset provides the opportunity to use your personal account. It is convenient to make various payments and transfers from it.

Reducing the amount

The amount can be not only increased, but also reduced. This occurs when:

there is an outstanding debt;
there is a risk of default.

This is carried out in a unilateral mode, which is indicated in the contract. If desired, the client has the opportunity to independently reduce the amount. For example, he is given 300,000 rubles, but the client does not withdraw such money and is afraid of losing the card. Then he can draw up an application in which he asks to reduce the amount of funds to the desired amount. Providing a limit is a beneficial service, because if necessary, you do not need to look for where it is necessary to repay the debt on time.

may provide to the borrower. Creditors can be banks, companies, credit cards, car companies or other type of lenders.

Restrictions depend on a number of items including your credit history and credit rating. Your credit history or credit report shows what payments you have made in the past and how much. A credit score shows a subjective assessment of your ability to pay based on credit history and your assets and/or liabilities. These factors are part of the evaluation process that lenders use when setting credit limits.

Credit limits must be carefully checked to ensure that you do not exceed the amounts specified in the contract. If you understand that you need to increase your credit limit, contact the lenders immediately and do not leave this question for later. In order not to exceed the limit, you can keep a pocket laptop with you and write down your purchases in it. This will help you control your expenses and avoid the possibility of exceeding your credit limit. Exceeding your credit limit will leave a negative mark on your credit report.

Consumers with excellent credit scores and excellent credit history are often rewarded with higher spending limits. Having a high credit limit and not exceeding it can raise your credit score significantly, which is often viewed favorably among lenders. A consumer who has the ability to spend large amounts but chooses not to do so often is considered a responsible borrower.

Many lenders often apply credit limits to evaluate new borrowers, who often receive lower spending limits. If a new borrower complies with the credit conditions, making the planned ones and does not allow overspending, the credit limit is usually increased for him.

Credit limits can go up and down based on your spending pattern. If you have an upper limit that is consistently higher than the minimum payments on your balance, your lender may waive the old terms to lower the limit. Likewise, if you are a consumer who has a high credit limit and never reaches it, and you make significant payments to your credit balance, your credit limit may be increased.

There are reasons why there are such restrictions on loans. Be careful with credit limit is vital and will have a direct impact on your future financial situation. Your ability to borrow against future purchases, such as a house, car, and other large purchases, is directly related to how you manage your credit limit. Spend less when shopping on credit and you will have more opportunities in the future.

Expenses, months

Min. payment

up to 950000 rubles

How to increase the credit limit?

This can be done in different ways. For example, you can apply to VTB 24 by attaching a certificate of income, availability of property, sources of additional income. Within 3 days, the bank makes a decision to increase the limit or refuse it. In Binbank, the limit is increased by the bank unilaterally with its constant use and return without delay. Thus, the limit increases:

When providing documents confirming solvency.
With active use of bank funds.

Where can I see the credit limit?

It is prescribed in individual conditions upon receipt of a credit card.
When requesting a balance at an ATM, the receipt will indicate the amount of funds, taking into account the credit limit. For example, a client has 1 tr. their money and 50 tr. limit - the balance will show 51 tr.
At the bank branch on the card statement.
In Internet banking. For example, in Binbank it will be listed in the "Cards and Accounts" section in the upper left corner.

Can the bank reduce the credit limit?

Such cases also happen. It's connected with:

The emergence of outstanding debt.
The emergence of the risk of non-repayment of debt, for example, the bank became aware of the reduction in the organization where the client works, and so on.

The reduction occurs unilaterally. This is written in the loan agreement. If desired, the client can independently ask to reduce the credit limit. For example, the bank has set a limit of 300 tr, but the client does not use this amount and is afraid to lose the card. In this case, the client writes an application for reducing the credit limit and indicates the desired amount.
Thus, the credit limit is a necessary option for everyday payments. If necessary, you can always use it and not look for where to borrow money. It is worth using it deliberately, because the funds taken must be returned back.

The credit limit is one of the basic concepts used in the field of consumer lending. Having information about the credit limit, you can know exactly what the minimum and maximum threshold for obtaining borrowed funds is set by the bank.

The size of the credit limit is important information for any lender. With the help of this tool, credit organizations evaluate borrowers and minimize the risks of non-repayment of borrowed funds. In the case of a credit limit on a bank card, financial institutions offer a grace period (usually about 50 days), during which the return of the spent amount will not require payment of interest.

Ways to determine the credit limit

The calculation of the credit limit amount is based on the following factors:

Information about income provided by the borrower. The bank calculates the data and determines the maximum possible loan amount. The estimated amount of the loan, plus interest, is divided by the term of the loan agreement. The result obtained is correlated with the monthly income of the borrower.
A credit rating is an approximate assessment of a borrower in terms of reliability of performance of obligations and solvency. It is formed on the basis of data on the client's credit history, the presence of debts on existing loans, as well as information on the ratio of his assets and liabilities.

Changing the credit limit

New clients of financial institutions without a credit history usually cannot count on a high credit limit. When a borrower reapplies for a loan, bank employees will definitely analyze information about his credit history, including the size of the loan limit. If it was large and the borrower successfully repaid the debt, this will be an important argument in making a positive decision. Also, the increase in the loan limit is affected by the status of the borrower as a salary or regular client of a financial institution.

An increase in the value of the credit limit is possible as the positive experience of interaction with the bank increases. It consists in strict observance of the limits of the credit limit (even if otherwise allowed by the agreement) and keeping a certain amount on the account. A client who has the opportunity to spend all the funds provided, but does not do this, is classified by banks as trustworthy.

In some banks, in order to increase the credit limit, it is necessary to apply with an application, accompanying it with certificates confirming income. You will also need to prove the existence of property or sources of additional income. In other financial institutions, the increase is made unilaterally.

Credit Limit Information

Credit card holders can obtain information about the credit limit by ordering a bank statement or by going to the appropriate section of their personal account, in addition, it is indicated in the terms of the agreement, which are provided upon receipt of the card. You can find out in advance the approximate amount of the credit limit that the borrower is entitled to count on using the online calculator service that exists with most commercial banks.

The habit of using credit funds in the modern world accompanies the daily life of many people, no matter how large the amount of the planned purchase. A credit limit (CL) is a concept that any borrower who has ever applied to a financial institution for a loan has come across in one way or another. This is the name of the amount within which the needs of the borrower are financed.

The essence of the concept and the scope of its application

Often, when talking about what a credit limit is, many people mention exactly the upper limit of the maximum amount possible for issuance to borrowers, but it is worth noting that the CL is set by most banking and non-bank financial institutions also for the lower threshold for issuing cash loans. This is explained by the fact that the minimum possible amount of lending is a kind of break-even level that provides coverage for operating costs associated with servicing the loan.

The upper threshold of the credit limit in most cases is set for each individual borrower individually based on its solvency, availability of guarantors, collateral, as well as credit history, which indicates the client's previous experience and ability to manage borrowed capital.

How is CL determined

There are many approaches and methods for determining the credit limit, but most often financial and credit institutions use the following:

Setting the CL at the level of the minimum of such values as the availability of liquid collateral from the client, the ability to service the loan, financial position and the maximum CL for a specific program.
Establishing an overdraft limit of 25-35% of the average turnover on a client's account not opened with a lending bank.
Establishing an overdraft limit of 40-50% of the average turnover on a client's account opened with a creditor bank.

Financial institutions can provide their customers with loans both with a fixed limit and with a revolving credit line. If a fixed limit implies a constant decrease in the funds available on the account as they are used, then a revolving credit line allows you to repeatedly use a loan issued once, since the amount of funds used from the account is renewed by the amount of payments made to pay off the debt.

Determining the value of CL for each specific borrower, banks analyze its credit history and, accordingly, the credit rating, in which special attention is paid to whether the client had cases of delays on closed or currently active loans, and also what is the share of repaid debt in its total amount.

A larger CL is set by banks for those borrowers who have confirmed their reliability in the past by paying off the creditor bank in a timely manner, as well as for those who are regular or salary clients. In addition, the variation of CL values is also possible in the case of issuing credit cards of different classes. Thus, the credit limit is constantly increasing when moving from classic to "gold" and "platinum" cards, respectively.

You can find out the approximate value of CL that a borrower can count on using online calculators that are available on the websites of most banks and other financial and credit organizations.