New Delhi, May 17 -- An unexpected drop in your credit card limit can severely restrict your buying power and damage your credit profile. Financial institutions adjust spending thresholds based on periodic risk analyses, past repayment patterns, and overall card usage.

Understanding these underlying triggers and practicing consistent credit management can prevent abrupt changes and protect your long-term financial health.

According to the Reserve Bank of India (RBI) rules, lenders must perform routine risk assessments on all borrowers. Because repayment trends and credit utilization are primary factors in determining credit scores, any sign of elevated risk may prompt a bank to preemptively lower your limit. Consequently, cardholders of...