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What is a Credit Card Limit?

7 min read
Last Updated: June 4, 2025
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Key Takeaways

  1. Your credit card company determines your credit limit, which is the maximum amount you can spend on your credit card.

  2. A higher credit limit may help keep your credit utilization ratio low, which can positively impact your credit score.

  3. Several factors affect your credit limit, including your credit report and your personal income-to-debt ratio.

Your credit card account comes with a preset spending limit: your credit limit. Credit card issuers generally offer you a credit limit they believe you can repay, based on your income and credit history. Understanding how your credit limit works may help you manage your credit card responsibly and qualify for a higher limit in the future.

What’s a credit limit?

Your credit limit is the maximum amount of money you may charge to one credit card account before paying down your credit card balance. If a transaction goes over your credit card limit, the credit card issuer may decline it, or you may have to pay a fee.

What’s the best way to get a high credit card limit?

Each issuer has its own criteria for determining credit card limits and may weigh individual components of your credit profile differently. The best way to get a good limit is by making sure all the factors that affect your credit score are in good standing.

Credit limit vs. available credit

Your credit limit and available credit are related, but they aren’t the same. Your credit limit is the total amount that you may charge on your credit card. Your card issuer may give you a higher or lower credit limit if your circumstances change, but otherwise, your spending limit remains the same as you use your card.

 

Your available credit, on the other hand, refers to the amount you have left to spend on your credit card account. As your credit card balance increases, your available credit decreases.

 

For example, say you have a total credit limit of $2,000 on your card and you spend $600. Your credit limit would remain the same, but your available credit would go down to $1,400. If you were to make a $200 payment, your available credit would go back up to $1,600.

How is a credit card limit determined?

Credit card companies set credit card limits by estimating how much additional credit you may manage and reliably repay. Your credit score plays an important role in determining your credit card limit. If you have a good credit score, card issuers may be more likely to conclude that you can manage a higher credit limit. A good credit score alone, however, doesn't necessarily guarantee a high credit limit.

To determine your credit limit, credit card issuers typically look at your credit history, your income, and how much you pay for your rent or mortgage. Pre-qualification could give you an idea of your credit limit without a hard credit check.

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Factors that help determine your credit card limit

Card issuers determine your credit limit based on several aspects of your credit history and overall financial life.

Credit report

As you manage a credit account, your lender typically reports your activity to a major credit bureau. The credit bureau uses that information to build your credit score. The following credit score factors from your credit report may also influence the credit limits you receive.

Payment history: Your payment history plays a big role in your overall creditworthiness. The idea is, if a cardmember has paid their bills on time in the past, they’re more likely to do so in the future. Ensuring you always make your credit card payments on time is one of the best long-term paths to a higher credit limit.

Credit utilization: Credit utilization refers to the amount of a person’s credit in use compared to their total credit available across revolving credit accounts. Credit issuers generally prefer a lower credit utilization ratio. If you’re already carrying a lot of credit card debt, a credit card issuer may not want to offer you additional credit.

Credit card issuers may look at both overall credit utilization and utilization on individual lines of credit when determining a credit card limit on a new account. If you plan on applying for a new card in a few months, paying down some existing balances may help you qualify for a higher limit.

Length of credit history: A longer credit history gives issuers a larger pool of data to predict how you’re going to use credit moving forward. A long history of responsible credit use generally helps improve your odds of a higher credit limit.

Recent inquiries: When you apply for a credit card, the credit card company conducts a “hard inquiry” on your credit report. Too many hard credit checks in a short period of time will likely impact your credit score. If you apply for multiple loans or credit cards in a short time frame, a lender may conclude that you’re not totally financially stable and offer you a relatively low credit limit.

Personal income and monthly expenses

Your income and housing costs may help determine your credit limit. If an applicant has a high income with a relatively low rent or mortgage, they may have more financial flexibility to manage credit card debts. Thus, they may qualify for a higher spending limit, depending on other factors.

Does a high-limit credit card affect your credit score?

If you already have credit card debt, then a high-limit credit card may improve your credit score by decreasing your credit utilization ratio.

For example, if you have two credit cards with a total credit limit of $5,000, and your balance is $2,500, your credit utilization ratio is 50%. But if you were to open a new credit line that increases your total available credit to $25,000, your credit utilization rate for the same balance would be 10%. So, having high-limit cards may let you run a larger balance without your credit utilization ratio affecting your credit score, as long as you keep your credit utilization rate low.

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What happens if you go over your credit limit?

Depending on the terms of your cardmember agreement, your credit card issuer may charge you a fee for going over your limit, or the transaction may be declined.

Can you raise the credit limit on your credit card?

If you have a lower credit limit than you’d like, don’t fret. Issuers may periodically review your credit account to determine whether you qualify for a credit line increase. And if you’ve used a card for a while without any missed payments or other negative activity, you may request a credit limit increase yourself. The card issuer determines your eligibility based on your current financial situation.

Can your credit limit be reduced after it’s determined?

You might think that a high credit limit won’t decrease once you have it. But achieving a high credit limit doesn’t mean you can ignore the factors that determine your credit limit. Card issuers periodically review your credit score. If you’re consistently using a large percentage of your credit limit, your score may be affected, which FICO2 explains, may lead to a lower limit.

Should you ask for a credit limit increase or apply for a new credit card if you need more credit?

Applying for a new credit card and requesting a credit line increase may both result in a hard credit inquiry, which may bring down your credit score a few points. Your individual credit history and needs may determine whether it’s best to request a limit increase on an existing credit card or apply for a new card. If you primarily want a little more room to spend, then a credit limit increase may be the right fit. But if you want to access different features or earn more rewards, you may want to apply for a new card.

Did you know?

You may want to apply for a new card to get rewards only offered to new cardmembers. If you get a cash back credit card from Discover, we’ll automatically match all the cash back you’ve earned at the end of your first year. There is no limit to how much we’ll match.3

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The bottom line

Understanding your credit limit is key to responsible credit card management. If you pay your credit card bill on time each month and keep your balance well below your preset spending limit, you may qualify for a higher credit limit in the future.

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