Credit cards offer a revolving line of credit that you can use, pay off, and repeat. Credit card companies usually limit how much you can spend using your account. Understanding how credit limits work, how card issuers determine them, and how your credit limit affects you can help you make better decisions and use credit cards more responsibly.
In this guide:
- What is a credit limit?
- How credit card issuers determine your limit
- How to find your credit limit
- How your credit limit can affect your credit score
- Can you request a change to your credit limit?
What is a credit limit?
A credit limit is a maximum amount you can spend on a credit card. A credit card limit can range from hundreds of dollars to tens of thousands, depending on the card, your credit score, and your payment history.
If you have a credit card with a $10,000 limit, you can spend up to that threshold, but you can’t keep using the card unless you pay off part of the balance.
If you try to go over your limit, your credit card company can take the following actions:
- Decline the transaction.
- Charge you a fee.
- Allow the transaction to go through.
- Raise your minimum payment amount.
- Reduce your credit limit.
- Close your account.
Regardless of your credit card company, you can generally expect your credit score to decrease. (More on that below.)
If you use your account responsibly and manage other credit well, your credit card issuer may raise your credit limit. However, the timeline and increase amount can vary based on your credit profile and card issuer.
Do charge cards have a credit limit?
Charge cards are similar to traditional credit cards. The primary difference is that charge cards don’t have a set credit limit, but they typically require payment in full each month. That does not mean charge cards provide users with unlimited spending power.
If you have a charge card, the card issuer will determine how much you can spend based on factors including:
- Past account history
- Financial situation
- Credit history
How credit card issuers determine your limit
Credit card companies determine your credit limit when you apply. It’s impossible to know what it might be without submitting an application, but you can cancel a card if the offer is lower than you’d like.
During the application process, card issuers consider the following factors to calculate your limit:
- Payment history: On-time payments are a top priority for credit card companies, so any missed payments in the recent past could result in a lower limit.
- Current accounts: If you have a lot of available credit on existing credit cards, especially with the same card issuer, you may get approved with a small credit limit or even get declined.
- Account history: If you’ve had your credit accounts for a while and haven’t applied for much credit recently, your odds of getting a higher limit may be favorable.
- Existing debt: The more debt you have, the more difficult it will be to take on new debt. In other words, the more you owe, the lower your credit limit.
- Income: Credit card companies will look at your income and your monthly payments as a percentage of income.
- Credit score: Credit card issuers consider credit scores to indicate your ability (and intent) to make on-time payments.
After you open an account, your card issuer may request that you update your income. If your income increases and your credit score remains in good shape, the issuer might grant automatic credit limit increases.
How to find your credit limit
Options can vary depending on the credit card issuer, but general guidelines for checking your credit limit include:
- Online account: Log in to your account online or via the card issuer’s mobile app, and you should see your credit limit near your balance.
- Statements: Check your most recent credit card statement for balance, limit, APR, and other important account details.
- Phone: If you can’t find your credit limit any other way, call the phone number on the back of your card, and you can get the information from a customer service representative or the issuer’s voice menu, if applicable.
How your credit limit can affect your credit score
One of the most influential factors in your FICO score is your credit utilization rate. You can calculate this rate for each credit card by following the formula:
Current balance / Credit limit = Credit utilization
You can also calculate your overall utilization rate by using the sums of those figures for all your credit cards.
For example, here’s how to calculate your overall utilization rate if you have three credit cards:
| Balance | Credit limit | Utilization rate | |
| Card A | $1,000 | $2,000 | 50% |
| Card B | $3,000 | $10,000 | 30% |
| Card C | $2,000 | $5,000 | 40% |
| Total | $6,000 | $17,000 | 35.3% |
Because a high utilization rate can have a negative effect on your credit score, many credit experts recommend keeping your utilization rate below 30% to maintain a healthy credit score. There is no set rule, but the lower your utilization, the better.
Your utilization rate is calculated monthly when your credit card company reports your activity to the credit bureaus (Experian, Equifax, and TransUnion). So if your score falls because of a high utilization rate, paying down the balance as fast as possible may result in a quick rebound.
Can you request a change to your credit limit?
Depending on your situation and your card issuer’s policies, increasing or even decreasing your credit limit may be possible.
Remember: Credit card companies may choose to increase or decrease your limit on their own.
Request a credit limit increase
A credit limit increase will increase your spending power, and it can help reduce your utilization rate, which can boost your credit score.
Increasing your credit limit can vary with each card issuer. In general, you can request an increase in the following ways:
- Your online account
- Your credit card mobile app
- Calling the phone number on the back of your card
If you want more available credit without requesting a limit increase, you can also apply for a new credit card.
Request a credit limit decrease
You may consider a credit limit decrease if you struggle with overspending or want a new credit card and can’t get approved due to high limits on other cards.
Your card issuer might be willing to grant this request. Call the phone number on the back of your card to begin the process.