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how do credit card limits work?
how do credit card limits work?

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How Do Credit Card Limits Work?

In this article we will look at what a credit limit is, how your credit card limit is calculated, and how you can change it.
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All credit cards have  a credit limit that is capped at a certain amount that you can borrow on the card. Credit card limits are determined by various factors and depend on the lender.

What is a credit limit?

Your credit limit refers to the maximum amount you can borrow on a credit card. When you spend on your credit card, it will be deducted from your credit limit.

As an example, if your credit limit is £1,500 and you owe £1,000, you will only be permitted to spend an additional £500 before you’ve reached your maximum limit. 

You can typically find your card’s credit limit by using the credit card app on your phone or logging into your account online. You can also contact your card issuer by phone or email, or view your limit on your latest credit card statement. 

What is my available credit?

It's important to distinguish between available credit and your credit limit. So, in the example above, where your credit limit is £1,500 and you’ve used £1,000, your available credit (unused credit) would be £500.

Your available credit grows as you make payments toward your outstanding balance. So, again following the example above, if you make a payment of £400, you would reduce your balance to £600. You will then have £900 in available credit, as your total credit limit on the card is £1,500.

What credit limit can I get?

Your card issuer will consider a number of factors before determining your initial credit limit. This depends on your creditworthiness at the time of your application, your income details, your current credit commitments, and more. The higheryour credit score, the more likely you are to get a higher credit limit.

Your credit limit might also change over time, depending on your creditworthiness and how you manage your credit card account. You may start out with a few hundred pounds, and get that increased over time. 

Credit builder credit cards and credit cards for people with bad credit will typically offer lower credit limits.

What happens when I go over my limit?

In many circumstances, you won't be able to spend more than your credit card limit because the transaction would simply be refused. However, if these transactions go through occasionally, your credit line will be exceeded and you may incur penalties for that. 

Your card issuer may also reduce your credit limit at that time, request repayment of your entire debt, close your account, or remove any promotional interest rates you might have had. 

Your credit score may also be impacted by exceeding your limit, so contact your credit card provider as soon as you can if you believe you may be approaching your credit limit.

Does my credit card limit affect my credit score?

Your credit card limit can influence a healthy credit score in multiple ways.

Your available credit

Along with your outstanding credit card balance, your credit limit is listed on your credit report. Your available credit makes a difference between the two. If you later apply for credit, lenders will be able to see how much of your available credit you have.

Your credit rating can also be impacted if you use too much of your available credit or repeatedly approach your credit limit. It's generally advised that you strive to use less than 30% of your available credit, also referred to as your credit utilisation rate. 

Using a modest amount of your credit limit shows lenders that you can handle your credit responsibly. 

Going over your limit

Your credit score may be impacted if you approach or exceed your credit limit, which may indicate that you are experiencing financial difficulties.

When you ask for a credit limit increase, the majority of suppliers will run a credit check, which could damage your credit history. If you want to raise your limit, be aware that too many credit inquiries may lower your credit score.

What is a good credit card limit?

There are different types of credit cards available and each will come with its own features. For example, a premium card will typically have a bigger credit limit than a credit builder card (for someone with a low credit score), simply because the credit card company believes they're likely to repay a higher amount. 

Not everyone has access to the same credit card offers. Therefore, the best credit card limit is one that balances your needs and your financial capabilities. Never forget that using a credit card involves borrowing money, which needs to be paid back - often with interest.

Can I change my credit card limit?

Depending on the issuer and your unique situation, you might be able to have your limit changed. 

If you’ve just received a new credit card, wait a while before requesting a credit limit increase as your card issuer is unlikely to grant increases right away. Some providers may have a minimum time limit in place before borrowers are allowed to request card limit increases. 

Your card issuer might be willing to increase your card limit after a few months if you’ve shown that you can handle your card responsibly and make all credit card payments on time. 

Some credit card providers may offer to automatically raise your credit card limit. You can ask for a smaller increase if you don't want a big credit limit or don't want higher monthly repayment commitments, so you are not required to automatically accept the increase.

In fact, during the last 12 months, 28% of credit card holders in the U.K. received a credit limit increase. However, only one in four actually requested an increase, which means that about 75% of these card holders received automatic credit card limit increases.  

Your lender will consider your credit record, how you have used your credit card, your monthly expenses, and whether you have made on-time credit repayments when determining whether to raise your limit.

Keep in mind that your credit limit may also decrease. For instance, if you've made late payments or your card issuer believes you could have trouble paying off your balance, they might lower your credit limit. 

You may also request a credit limit decrease if you feel you don't need a higher credit limit.

Should I increase the credit limit on my card?

This depends on your personal circumstances. For instance, you might think about requesting a larger credit limit if you need to make a large purchase that costs more than your existing credit limit.

However, you ought to only raise your credit limit if you have the money to do so and, ideally, if you can settle your debt before interest is applied.

On the plus side, having a higher credit limit can help you to have a better credit utilisation ratio.

More flexibility may be possible with a bigger credit limit, but it may also tempt you to overspend.

Spending more could result in higher interest rates, which could make it more challenging for you to pay off the debt on your credit card. As a result, it can be difficult for some to maintain their credit limit.

Additionally, you could ask your provider to lower your credit limit if you're concerned about overspending.

Remember that after changing your credit limit, the majority of suppliers will ask you to wait at least a few months before thinking about making another change.

It is probably not a good idea to raise your credit limit if you are having financial difficulties and need to borrow additional money to pay your bills. With a greater credit limit, you could incur more debt that might be challenging for you to repay. Always make sure your credit limit suits your personal needs. 


There are pros and cons to credit limits. It can be a very handy feature if you need to make larger purchases or cover an unexpected expense, but it can also lead to more debt or tempt you to spend more than you can afford.

Always consider a range of credit cards and the different kinds of credit card deals available before you choose a credit card and a specific limit. Keep in mind there are credit card charges, automatic limit increases, and the impact on your credit profile that you have to consider. 

Some credit providers may even offer you a balance transfer card with an initial interest-free period that can help save on interest charges if you repay your entire balance before the promotional period ends.

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