Woman sitting on a couch using a credit card to make an online purchase on a laptop at home.

What Does Available Credit Mean?

5 min read

Last Updated: June 24, 2025

Table of contents

Key Takeaways

Your available credit is the difference between your credit limit and your current account balance.
Available credit tells you how much you can spend before hitting your credit limit.
Making purchases with your card decreases your available credit, while making a payment increases it.

Have you seen the term “available credit” in a message from your credit card issuer? Or in your issuer’s online interface? It’s a common term, but it’s not always clear what available credit actually represents.

Your available credit is the amount of credit you have left to spend on your credit card before you hit your credit limit. It’s easiest to understand with an example.

How does available credit work?

If your credit limit is $4,000 and you currently owe $1,500, your available credit is $2,500. If you pay for a transaction with your credit card, your available credit will go down. This is because you’re closer to your credit limit. If you make a credit card payment, your available credit will go up.

Some credit card issuers send you alerts so you don’t exceed your credit card limit and incur interest charges. You can often set up these alerts in your online banking portal.

Available credit vs. credit limit

Your credit limit is the total amount that you can spend on a credit card. If you max out your credit card by spending all the way up to your limit, you’ll need to make a payment before you use your card again.

Lenders look at your credit report when setting your credit limit. Your credit history, credit score, income, and other factors influence your limit..

Your credit limit minus your current balance is your available credit. This is the amount you can spend on the card before you reach your limit. Let’s expand on the example above:

If you have a credit limit of $4,000 and a balance of $1,500, your available credit is $2,500.
Let’s say you spend $400 on a purchase. Now your balance is $1,900 and your available credit is $2,100.
Imagine you make a payment of $1,000. Your balance is now $900, making your available credit $3,100.
Now, if you had an interest charge of $5, your balance would be $905. That would leave you with $3,095 in available credit.
Finally, we’ll say you pay off the whole card and have no balance. Now your available credit is $4,000 (the same as your credit limit).

As you use your credit card, your available credit gets lower until you make a payment. Usually, you’ll make a credit card payment near the end of your billing cycle, especially if you have automatic payments set up. But, if your balance is getting close to your credit limit, you may want to make a payment earlier. This may let you keep using your card without hitting your limit.

How available credit affects your credit utilization

A credit bureau uses your balance and available credit to calculate your credit utilization ratio. If your total credit limit across multiple cards is $10,000, and you owe $4,500, your credit utilization ratio is 45%.

The Consumer Financial Protection Bureau recommends maintaining a credit utilization rate of 30% or less. This may help improve your credit score. A low credit utilization ratio may indicate to potential lenders that you don’t have too much credit card debt and you're not at risk of defaulting.

Try these tips to keep a low credit utilization ratio:

When using credit cards, spend only as much as you can repay at the end of the cycle.
Try to pay off your balance in full and on time every month.
Avoid using more than 30% of your credit limit.

Increase your available credit with a higher credit limit

If your available credit doesn’t meet your needs, you have some options.

Credit card companies may increase the credit limit on a card you already have. You might get an automatic credit limit increase if you use your card responsibly. If you don’t want to wait, you can submit a request to your credit card company. They’ll look at your credit report and decide whether to issue the increase.

A higher credit limit can help you cover more day-to-day expenses or larger purchases. It may also be useful during financial emergencies. A higher limit can improve your credit utilization ratio, too.

You may also be able to raise your total credit limit by getting a new credit card. Imagine that you have one credit card with a credit limit of $5,000. If you open a new card with a limit of $4,000, you’ll now have a total credit limit of $9,000.

But be careful: just because you have more available credit doesn’t mean you should start spending more. It’s best to only charge purchases that you can pay off at the end of your billing cycle. Carrying a balance into the next month could result in interest charges and credit card debt.

Did you know?

If you’re carrying a balance and paying interest, or you’re struggling to make your minimum payment, a balance transfer offer could help. You may be able to consolidate multiple debts into a single card with a low introductory annual percentage rate (APR).

Learn More

The bottom line

Your available credit is the amount that you can charge on a credit card before you hit your credit limit. You can calculate it by subtracting your current balance from your credit limit. You may also be able to see your available credit by signing into your credit card issuer’s online banking portal.

Using 30% or less of your available credit limit may help improve your credit score. To increase your available credit, you can request a credit limit increase from your card issuer or apply for a new credit card.

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