1. What is the Credit Limit Calculation?

The credit limit calculation determines the maximum amount a bank will allow you to spend on your credit card based on your income and the AY (Assessment Year) factor specific to India.

2. How Does the Calculator Work?

The calculator uses the credit limit formula:

Where:

• \( income \) — Annual income in Indian Rupees (INR)
• \( AY\ factor \) — Assessment Year specific multiplier (dimensionless)

Explanation: The AY factor varies by bank and card type, typically ranging from 1.5 to 3 times your monthly income converted to annual basis.

3. Importance of Credit Limit Calculation

Details: Knowing your potential credit limit helps in financial planning and choosing the right credit card. It affects your credit utilization ratio which impacts your credit score.

4. Using the Calculator

Tips: Enter your annual income in INR and the AY factor provided by your bank. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is an AY factor?
A: The AY (Assessment Year) factor is a multiplier used by Indian banks to determine credit limits based on your income.

Q2: How do I find my AY factor?
A: Contact your bank or check their credit card policies. It typically ranges from 1.5 to 3 times your monthly income.

Q3: Is this calculation accurate for all banks?
A: While the formula is standard, actual limits may vary based on the bank's internal policies and your credit history.

Q4: Does this include add-on cards?
A: No, this calculates the primary card limit. Add-on cards typically share the primary card's limit.

Q5: Can I request a higher limit?
A: Yes, after maintaining good credit behavior for 6-12 months, you can request a limit enhancement.