Being disciplined in payment of your credit cards and personal loans could have its drawback. As soon as you have done so for about 6-12 months, the chances are extremely bright that you would get a call from a bank executive.

Enhancing your credit limit on credit cards

The worst credit to pay if you are unable to pay a credit card bill on time is the credit card. Interest rates vary anywhere between 36-45 per cent per annum. With such exorbitant interest rates you would struggle to complete the entire credit card payment.

Now, by enhancing your credit limit you can easily add to your misery. Check if you really need to enhance the same. This is because the higher the limit the higher the tendency to spend. So, the best way is a disciplined approach through whatever you have.

If you have a large credit limit which is enhanced you might be tempted for an expensive holiday or an electronic item that you may not need.

If you get a call from the bank politely decline the enhanced credit limit. The other danger is that when you genuinely need to take money for a home loan or an education loan the bank or institution may see that you already have a huge enhanced limit on your credit card. This might be a big deterrent in getting a loan.

Also, if the limit is large and you default in payment it could affect your CIBIL credit score. Read more on CIBIL here

Enhancing your personal loan amounts

Once you have paid installments on your personal loans faithfully for about a year, the chances are bright that you would get a call from a bank executive to top-up your personal loans. There could be a processing fee that maybe involved again along with the usual interest rate of 14-20 per cent. This again is a very expensive loan to take and should be avoided at all costs.

Please be careful when taking calls from bankers. Invariably, you get calls for loans, credit cards or mutual fund scheme. You need to be wise and only in case of dire emergency you need to take a call on the same. Remember, it is you who are going to settle the amount and nobody else. So be careful and do not be hesitant to say no.

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