1. What is the PKR-based Limit Calculation?

The PKR-based limit calculation estimates the maximum credit card limit based on your annual income in Pakistani Rupees and a predetermined factor. Banks typically use this method to determine credit limits for cardholders.

2. How Does the Calculator Work?

The calculator uses the simple equation:

Where:

• \( Income \) — Annual income in Pakistani Rupees
• \( Factor \) — Multiplier determined by the bank (typically 0.2-0.5)

Explanation: The factor represents the portion of your income that the bank is willing to extend as credit. This varies based on credit history, employment status, and other risk factors.

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 negatively impact your credit score.

4. Using the Calculator

Tips: Enter your annual income in PKR and the factor (default is 0.3, which is typical for many banks). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical factor value?
A: Most Pakistani banks use factors between 0.2 and 0.5, with 0.3 being common for standard credit cards.

Q2: Can I get a higher limit than calculated?
A: Some banks may offer higher limits to customers with excellent credit history or additional income sources.

Q3: Does this apply to all credit cards?
A: Premium cards may have different calculation methods or higher factor values.

Q4: How often is credit limit recalculated?
A: Typically annually, but can be reviewed upon request or when your financial situation changes significantly.

Q5: Why is my actual limit different?
A: Banks consider additional factors like existing debts, credit score, and employment stability when setting limits.