What is a credit card limit? A comprehensive guide (2024)

When you get approved for a new credit card, you will receive a full set of terms and conditions that explain any fees you may have to pay, the interest rate you will be charged if you carry a balance and more. While the fine print can seem long, you should understand a few key pieces of information before you start using your card. One of those key details is your credit card limit. Read on to learn how your credit limit is determined and what you can do to get a higher one.

Understanding the basics of credit card limits

What is a credit card limit? It’s the highest amount you can charge to your card. Most lenders don’t boldly advertise the credit limits attached to their cards, but some include a baseline of credit limits in the fine print. For example, the Chase Sapphire Reserve® has a guaranteed minimum credit limit of $10,000, while the Discover it® Cash Back*The information for the Discover it® Cash Back has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer. has a much smaller guaranteed minimum limit of just $500.

What is a good limit on a credit card? It depends on your personal history. For example, if you have never used a credit card before, an initial credit limit of $500 or $1,000 isn’t a bad starting point. However, if you have an excellent credit score and a six-figure income, the definition of a good credit limit will be higher. While credit limits can look different based on the type of card and your personal credit history, one fundamental rule always applies to a credit limit: Don’t go over it.

How is a credit card limit determined?

Your credit score, income and existing debt are all among the factors that can affect your credit limit. Generally, consumers with high incomes and strong credit histories are in a better position to get approved for high credit limits.

There is an exception to the credit score rule: Some secured cards do not require one. However, it’s also easy to know your credit limit with those cards. It’s usually determined by your upfront security deposit.

Your credit limit can change after you open the card, too. Issuers can increase the limit (more on that below), but they can also decrease the limit. This may happen if you fail to make your payments on time or you try to exceed the limit.

Credit card limit and credit score

How close you get to your card’s credit limit can impact your credit score. This is because your credit utilization ratio, which reflects how much debt you’re carrying versus the total amount of debt you are allowed to carry, is a factor in your credit score.

For example, if your credit limit is $10,000 and your card’s balance is $2,000, your credit utilization ratio on that card is 20%.

“The lower the percentage is, the more favorable for a FICO score,” said Tom Quinn, vice president of strategic alliances at FICO, which is one of the credit scoring models lenders use to evaluate prospective cardholders.

The average ratio for “FICO high achievers” (consumers with scores of about 785 or above on the FICO Score 8 model) is 7%, Quinn says. FICO says the FICO Score 8 is the most commonly used version of its score.

But you don’t have to aim for a 0% credit utilization ratio. Sometimes, using a small amount of your available credit is better for your score than using none of it, Quinn says.

A credit utilization ratio below 30% is a decent guidepost.

Credit card limit vs. available credit

Your credit card limit represents the total amount you can carry on your card. Available credit, on the other hand, represents the amount of unused credit you have at any given time. For example, if your credit limit is $15,000 and you have a balance of $5,000, you have $10,000 in available credit. If you make a payment of $2,500, your available credit increases to $12,500.

You don’t have to wait to make payments on your credit card until the due date arrives, so you can regularly pay down the balance to maintain a lower credit utilization ratio.

How to increase your credit card limit

Your credit limit isn’t set in stone. Some cards, such as the Capital One Platinum Credit Card*The information for the Capital One Platinum Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer. , advertise the possibility of credit limit increases. In these and other cases, issuers may notice on-time payments, responsible spending behaviors or updated income information and upgrade your credit limit.

However, you don’t have to wait for an issuer to review your account. You may be able to submit a request for a credit limit increase via your online portal or by calling the customer service number on your card. Be prepared to provide an updated estimate of your annual income. If you have recently scored a raise at your job, those higher earnings may help make your case.

*The information for the following card(s) has been collected independently by CNN Underscored Money: Discover it® Cash Back*The information for the Discover it® Cash Back has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer. and Capital One Platinum Credit Card*The information for the Capital One Platinum Credit Card has been collected independently by CNN Underscored. The card details on this page have not been reviewed or provided by the card issuer. . The card details on this page have not been reviewed or provided by the card issuer.