If your credit limit is reduced, your utilisation of the credit card will increase. It will have a negative impact on your credit score
Mumbai: Samart Sinha, 28, a freelance photographer, recently reduced the credit limit on his credit card fearing he would spend more. “As I am a freelancer, I don’t have a regular income. Using my credit card too often, I realised that my spending has increased considerably. I am repaying it, but fearing that I would get into a debt trap, I reduced the credit limit to Rs1 lakh from Rs2 lakh," said Sinha, adding his credit card spends were around Rs1.2 lakh a month. You may think that Sinha’s approach is right, but it is not. Here is why:
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