A credit limit is the maximum amount of money a person can spend when using a credit card. For example, if a credit card has a credit limit of $5,000, then the cardholder can make up to $5,000 in transactions on the card before they are unable to use it further. Once the cardholder has reached the credit limit, they must pay down their balance to regain spending power.
Certain credit card transactions, such as cash advances or balance transfers, may have their own limits set by the credit card’s issuer, but those limits are still part of the overall credit limit. Below, you can learn more about credit limits on credit cards, from how they’re determined to how to increase them.
Your credit card’s credit limit is determined by the card’s issuer based on your overall creditworthiness and ability to pay. Credit card companies don’t want to give you more spending power than you can afford.
- Income: The more money you make, the more money you can afford to spend. This is especially true if you also have a low amount of existing debt relative to your income.
- Credit history: The better your credit is, the more spending power a credit card issuer is likely to trust you with.
- Profitability: Things like your history of incurring interest charges and fees, your brand loyalty, and the likelihood that you will be able to repay your charges in the case of financial difficulties will factor into your credit limit.
Learn more about how credit limits are determined.
It is best for your credit score if you use 1% to 10% of your credit limit. This shows that you are making purchases with your card but not overdoing it, which indicates that you’re a responsible borrower.
Best and Worst Credit Utilization Percentages
- 1% to 10%: Best for credit score growth
- 0%: Still helps your score grow, but more slowly
- 11% - 29%: Decent, but not as good as lower utilization
- 30% - 49%: Not great for your score, but not overly concerning
- 50%+: Bad for your credit score and a red flag for lenders
- 100%: Very bad for your credit score and a huge red flag for lenders
Overall, it’s important to be responsible with each card’s credit limit. Credit utilization is calculated for each credit card account individually, as well as for all of your accounts together.
If you need to use a lot of your credit limit for a big purchase, just pay off part of it before your monthly billing period closes. Your issuer will only report how much of your credit limit you’ve used as of your statement date.
Learn more about credit utilization.
The distinction between your credit limit and your available credit is pretty simple. Your credit limit is the card’s overall spending power, while your available credit represents how much of that spending power is left to use after subtracting the current balance owed on the card.
For example, if you have a $5,000 credit limit and a $2,000 balance on the card, then your available credit is $3,000, because you can spend $3,000 more before reaching the credit limit.
Learn more about credit limits vs. available credit.
The average credit card limit is around $13,000, according to the most recent data from TransUnion, one of the three major credit bureaus. This number takes into account all cardholders in the U.S., including people of all ages, credit scores and incomes.
Learn more about the average credit card limit.
The credit limit you start off with on a credit card is not necessarily the credit limit you will have forever. The easiest way to get a credit limit increase is to ask your issuer for one, and you’ll have the best chance of getting one after you’ve made at least six consecutive months of on-time payments.
Learn more about how to increase your credit limit.
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The credit cards with the highest limits are rumored to offer $100,000+ to people with extremely large incomes and the best credit scores. Most credit cards only disclose a minimum credit limit, though.
Popular High Limit Credit Cards
For more options, check out WalletHub’s editors’ complete picks for the best high limit credit cards available right now.
No limit credit cards don’t really exist. But there is a special class of credit cards called “no preset spending limit” credit cards. With these cards, your spending limit can change from month to month based on factors like your income, credit score, payment history and spending patterns.
Learn more about credit cards with no preset spending limit.