What is a credit card spending limit — and what to know

Your credit card spending limit is the maximum amount you can spend on the card, and is determined by your credit card company.

A credit limit has a bigger impact on how you use your card than you might expect. It affects everything from the purchases you make to balance transfers and even your credit score. Here’s what you need to know to make the most of your credit card spending limit:

A credit card spending limit is the total amount of money you can charge to your credit card. Purchases you make with your card count toward your spending limit, as well as other transactions like balance transfers. This spending limit is assigned when you’re approved for your card, though it can change over time.

Credit limits can vary by a wide margin. Beginner credit cards, for example, may only have a credit limit of $300 or $500, while premium rewards credit cards can carry spending limits upwards of $15,000 or $20,000 — and you’ll find plenty of credit limits in between. The average credit card limit in the U.S. is $29,855 according to Experian data from 2023.

You can find your card’s credit limit by contacting your issuer, and often within your account details online or in your card’s mobile app. You may see your “available credit” fluctuate as you spend and your credit card balance increases compared to the total credit limit. Here’s an example:

When you’re approved for a credit card, your issuer assigns a credit limit based on the details in your application, including your credit history and income. In general, you’re more likely to qualify for a higher credit limit with a larger income and longer credit history.

Other factors can affect your credit limit too.

For example, some issuers only allow you to have a maximum amount of credit across all of your accounts with them. If you already have multiple card accounts with an issuer and you’re close to that maximum, you may be assigned a lower credit limit than you otherwise would to stay under the threshold across your open accounts.

You may also qualify for different versions of a card, which can affect your line of credit. For instance, you may be approved for a Visa Platinum or Visa Signature version of the Chase Freedom Unlimited® — your credit limit will be at least $500 with a Platinum but at least $5,000 with a Signature.

There are a few ways to increase your credit limit and have more flexibility for spending on your card.

First, you can request a higher credit limit yourself. If you have a better credit score than you did when you first applied for the card or you have a higher income, you may want to ask your issuer for a larger credit line.

You can call the number on the back of your card to speak with a representative or, depending on your card issuer, even make the request online.

You can also wait for an automatic credit limit increase from your credit card issuer. For example, when you open the Capital One QuicksilverOne Cash Rewards Credit Card, you’ll be automatically considered for a higher credit limit in as few as six months.

The best way to increase your chances of getting a higher credit limit (whether you request one or not) is by keeping your account information — especially increases to your income — up to date.

You’ll most commonly find cards with no preset spending limits issued by American Express. Here are a few examples of Amex cards with no preset spending limits:

That doesn’t mean you can spend any amount you want with these cards. Instead, they offer more flexible spending options. According to the Amex card terms, “the amount you can spend adapts based on factors such as your purchase, payment, and credit history.”

A card with a flexible spending limit can be useful if your spending habits require you to make large purchases or your budget changes often — which is also why you’ll find several business credit cards with flexible credit limits. Just make sure you make on-time payments in full to avoid fees and penalties.

Your credit limit can have a significant effect on your credit score.

Credit limits help determine your credit utilization ratio — which is one of the most impactful factors in your overall credit score. That ratio is the difference between how much available credit you’re using compared to how much you have available. Keeping a low credit utilization can help you build credit and maintain a good credit score.

For example, say your credit limit is $5,000 and you have a current balance of $3,000. It may seem like you’re nowhere close to maxing out your credit card, but this balance means you have a credit utilization ratio of 60%. Best practices state that you’ll see the best effect on your credit score by keeping your utilization under 30% — and even better, under 10%.

In this example, 10% – 30% of your credit utilization would mean maintaining a balance of $500 – $1,500 or less.

That’s one reason why a high credit limit can be useful, even if you don’t ever plan to use it. You’ll have more flexibility to make purchases without worrying about increasing your credit utilization and negatively affecting your credit score.

Maxing out your credit card is never a good idea, but it’s still smart to be prepared for the potential consequences of exceeding your credit card spending limit.

In some cases, your issuer may deny over-limit transactions altogether, so you won’t have the option of exceeding your limit. Federal regulation following the CARD Act of 2009 requires you to opt into the ability to go over the limit. Since most cardholders don’t opt in, it’s rare for over-limit transactions to go through and lead to over-limit fees. If you’re unsure about your card account or whether you’ve opted in, make sure to read the card terms or contact your issuer.

Going over your credit card limit — or even reaching the maximum limit on a card — can have other lasting effects. Like we covered above, high credit card balances can cause your credit utilization to rise and potentially hurt your credit score. If you’re maxing out your card because of overspending, you also risk taking on lasting credit card debt at today’s high credit card interest rates.

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