Available credit is the remaining amount of your credit card’s credit line that you haven’t spent yet. You can find your available credit on your monthly account statement or by logging in to your online credit card account. It’s important to be aware of how much available credit you have because if you try to spend more than that amount, your card may be declined.
To calculate your available credit, the card issuer starts with your full credit limit. Then, your current balance – i.e. the amounts of any purchases, fees, and interest you currently owe, minus any payments you’ve made toward your balance – is subtracted from your credit limit. This leaves your available credit.
Here’s an easier way to visualize available credit:
Credit Limit – Current Balance = Available Credit
Available credit isn’t only calculated once a month, of course. It changes every time your current balance changes. For example, when you make a payment on your credit card, your available credit increases. When you make a purchase with your card, your available credit will decrease.
It’s worth noting that the less available credit you have, the higher your credit utilization on that credit card will be. And if your credit utilization stays high, that can spell bad news for your credit score. Make sure to keep your overall credit utilization below 30% to maintain your credit standing.