A credit card allows you to borrow money from your card issuer. You can get one from a bank, credit union, or other applicable financial company. Usually, you have to qualify to get a credit card. The card is essential as it can help you purchase crucial goods and services when you have no money left in your bank account as long as your card has some balance. But what does current balance mean on a credit card?
In most cases, you should have a credit history to get a credit card. Having a credit history means you have some borrowing records from various financial companies. If you borrow finances from a financial company, you have credit scores. Credit scores, also known as FICO scores, are numerical expressions of a person’s creditworthiness. They show your capability to pay a particular amount of loan.
However, getting a credit card is not necessary to have a FICO score. We have secured credit cards that require you to pay some security deposit to get a credit card. The deposit acts as security in case you fail to pay. Again, the deposit amount determines your borrowing limit. The cards are for building credit, so you can qualify for unsecured credit cards or loans.
How do you apply for a credit card
You can apply for your credit card online by visiting the issuer’s website and following the application procedure. You can also apply for a credit card at a physical branch of your suitable financial company. You need to provide the necessary documents during the application. However, suppose you have a checking account with the institution from which you are getting the card. In that case, you may not need to provide any documents since they already have your details.
The first thing you should do before getting a credit card is to check your scores. That helps you to know the type of card you can apply for. Various credit cards require various scores to get them. That is, if you are applying for an unsecured credit card. For the secured cards, you require a security deposit.
After checking the cards, you can qualify as per your scores, you can then check various factors such as the interest rates, the credit limit, fees, and so on. Once you find the most appropriate card, you can apply for it.
What is a credit limit
A credit limit is the maximum amount of money one can borrow with a credit card. The limit usually varies from one cardholder to the other, depending on the FICO scores or security deposit amount. You cannot borrow beyond a credit limit. Once you exhaust it, you have to repay your debt first before borrowing again.
One thing you need to know once you get your card is that you should never exhaust your credit limit. That is because it affects your overall scoring. Financial experts recommend using at most 30% of your credit limit to maintain good scoring. Suppose you know that you can spend beyond 30% of your credit limit. In that case, you should get several credit cards from various financial companies.
How to increase a credit card limit
You can increase your credit card limit by practicing a few things with your card. They include the following.
- Make timely payments of your credit card bill.
- Spend at most 30% of your credit card limit.
- Keep your card active.
- Update your monthly income with your card issuer.
- Request your card issuer to increase your limit.
How to check your credit card limit balance
A credit card balance is the amount of money left to borrow with your credit card. You can know the balance by deducting the amount you spent with your card from the credit limit. If your card issuer allows you to manage your card online, you can easily log into your account and check the balance.
Alternatively, you can check the balance at an ATM point. Credit cards allow you to use them in ATMs to withdraw finances. Therefore, it is easy to know your balance once you insert your card and PIN into the machine and navigate to the balance section. Another way you can know your balance is by calling your card issuer’s customer care and asking them to check the remaining amount you can borrow.
What does the current balance mean on a credit card
The current balance on a credit card refers to the total amount you owe on your account, less any pending purchases or payments. That means all the purchases made and processed by your credit card issuer since you last paid your bill form part of the current balance.
To be precise, your current balance includes all your money and finances that are being held or are in transit, such as checks. Therefore, it is what you always have in your credit card account.
Your credit card balance increases every time you use your credit card for your purchases. If you use your card daily, the current balance will increase unless you make returns, which will decrease the current balance accordingly.
Does your current balance affect your credit scores
The current balance affects your scores since it directly increases with your card usage. Remember that your card usage contributes a lot to your overall scores. If you have a high current balance, you have used your credit limit so much that you have a large balance.
As I mentioned, using too much of your credit limit can negatively affect your scores as companies view you as a risky borrower. Therefore, maintaining a low current balance can help you boost your scores to a greater extent.
How to use a credit card
You can use your card in various ways, such as;
- Buying goods and services online and at physical stores
- Bill payment
- Withdrawing money from ATMs
- Getting convenience checks
Bottom line
A credit card allows one to borrow finances from their card issuer. The card is essential to help you when you have no money left in your checking account. You can apply for your credit card online or at a physical branch. It all depends on your card issuer. Once you apply, you get a credit limit from your card issuer, which is the maximum amount you can borrow. As you use your card, your current balance increases.
