Average credit limit on a first credit card

Quick insights

• The average credit limit on a first credit card may be low.
• This is because credit limits are usually determined by factors like your credit history, income, debt and credit utilization.
• You may be able to request an increase to your credit limit through your card issuer.

Getting your first credit card can feel like a big milestone. It can come with new responsibilities and some more financial independence. But the amount of available credit you have on your first card is based on your credit limit.

Read on to learn about the average credit limit for a first time cardmember and what factors go into determining that limit.

Understanding the average credit limit for first-time cardmembers

A credit limit is the maximum amount of credit that a financial institution or lender extends on a given line of credit, such as a credit card. It represents the maximum amount that a cardmember can borrow. The average credit limit for first-time credit cardmembers can vary, but first-time cardmembers could have a low credit limit due to a few factors.  

Factors affecting your first card's credit limit

There are a few factors that may determine your first card’s credit limit. They include:

Credit history

Credit history is a record of how you’ve managed your credit and debts over time. If you're applying for your first credit card, you may not have a substantial credit history. However, if you've taken out student loans or auto loans, they are included in your credit history.

Lenders look at your credit history to help assess your ability to manage your finances as a borrower. If you've demonstrated responsible borrowing in the past, that could result in a higher credit limit.

Income

Your income is another factor in determining your credit limit. Lenders typically want to ensure that you have the financial means to pay back any debt you accrue. Higher income may help to give you a higher credit limit.

Debt-to-income ratio

Debt-to-income ratio is the percentage of your monthly gross income that goes towards paying your debts. If you have a high debt-to-income ratio, it could indicate that a significant portion of your income is already committed to other debt obligations. A high debt-to-income ratio could limit the amount of credit a lender is willing to extend.

Employment status

Being employed and having a steady source of income can positively impact your credit limit.

Credit utilization ratio

Your credit utilization ratio is the ratio of your outstanding credit balances compared to your total available credit. A lower credit utilization ratio can potentially help you get a higher credit limit. This is because it demonstrates that you may not be overly reliant on credit. If you've had other forms of credit in the past and have kept your utilization rate low, this could positively affect your credit limit.

Steps to increase your credit limit

Your credit limit is not set in stone. Improving your overall financial health by doing things like increasing income or reducing debt may help lead to a higher credit limit.

If you believe you’ve taken steps to improve your credit worthiness, you may consider requesting a credit limit increase from your card issuer. This is typically done by making a request online or calling your credit card company. But keep in mind, requesting a credit limit increase may result in an hard inquiry into your credit report and your request is not guaranteed to be approved.

Sometimes, a card issuer may automatically increase your credit limit. This can be based on factors like having the card open for a long period of time and making payments on time.

Can your credit limit be too high?

What is considered too high of a credit limit may depend on your personal financial situation. Some people may want to consider a credit limit amount that is high enough to allow for necessary spending, planned large expenses and the occasional emergency.

Some financial experts may warn that having a credit limit that is more than what you need can lead to unnecessary debt and overspending. But keep in mind that a higher credit limit may be beneficial too (if managed responsibly). Having available credit that you do not use could increase your credit utilization ratio.

Additional valuable information for first-time cardholders

If you are a first-time credit cardmember or looking to become one, here are a few other helpful tips and considerations:

• Get to know your card: Understanding the terms and conditions of your credit card, including interest rates and fees, may help you better manage your card and its credit limit.
• Mind your credit score: A starter credit card may be a helpful first opportunity to build your credit. By building up your credit, you can potentially set yourself up for lower rates and more lending opportunities in the future.

Getting your first credit card may feel challenging, especially if you have no credit history. If that’s the case, you may consider finding a credit card that doesn’t require prior credit history to qualify. For example, Chase has a card for those new to credit: the Chase Freedom Rise^® credit card.

In summary

First-time credit cardmembers may have a low credit limit. As you build up your credit history, make on-time payments and earn more income, you may be able to get a higher credit limit. You can also decrease your credit utilization ratio and debt-to-income ratio if you’re looking to help improve your credit score or increase your line of credit.