Does your credit card limit decrease during lockdown? Many banks reduce the credit limit of transactions, though not extensively. Some private banks have reduced their credit limit by up to 75 per cent.
Although some customers say that availing the EMI moratorium is the reson for the decreased credit limit, but banks deny this. Banks are clear that this is a common practice and that they are periodically analyzing lending and credit card-based costs. The banks’ explanation is that the current credit limit is being increased or decreased based on this analysis. But the severe financial crisis and the ensuing lockdown have caused a significant drop in the incomes of regular employees in the organized sector. This may be the reason behind the widespread credit limit reduction.
When there is a sudden fall in income, there is no other option than to rely on a loan. Credit cards are now widely used avail loans easily. Generally, credit card issuers often take steps to reduce their risk during financial crisis. It will identify the areas that are most likely to be affected by the crisis and will be more likely to be customers in such areas. Tourism, hotel and small business, for example. Even if the repayment is correct, the limit may be reduced or eliminated, depending on the risk level in some areas or the limit on ATM withdrawal using credit cards. This will be restored later