1. What is Credit Card Limit Calculation?

The credit card limit calculation estimates the maximum amount a bank may offer based on your annual income and creditworthiness factors. In Pakistan, banks typically use income multiples to determine appropriate credit limits.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Income \) — Annual income in Pakistani Rupees (PKR)
• \( Factor \) — Credit multiplier (typically 1.0-2.0 in Pakistan)

Explanation: Banks in Pakistan generally offer credit limits between 1 to 2 times your monthly income, converted to annual terms.

3. Importance of Credit Limit Calculation

Details: Understanding your potential credit limit helps in financial planning and ensures you don't apply for cards beyond your eligibility, which could affect your credit score.

4. Using the Calculator

Tips: Enter your annual income in PKR and the credit factor (start with 1.5 for most Pakistani banks). The calculator will estimate your potential credit limit.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical credit factor in Pakistan?
A: Most Pakistani banks use factors between 1.0 to 2.0, with 1.5 being common for standard cards.

Q2: Can I get a higher limit than calculated?
A: Some premium cards may offer higher limits, and existing customers with good repayment history may get increases.

Q3: Does this include all types of income?
A: Banks typically consider verifiable income from employment or business. Other income sources may require documentation.

Q4: How often do banks review credit limits?
A: Most Pakistani banks review limits annually, but you can request increases after 6-12 months of good usage.

Q5: Does this apply to all banks in Pakistan?
A: While the formula is generally applicable, each bank has its own policies and may use additional criteria.