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Credit card limits, explained

minute read

    In simplest terms, a credit card limit — also known as a credit line — is the maximum amount that a person can spend on their card, set by the credit card issuer. But there's more to it than that. Learn more about what a credit card limit is, what can happen if you go over your limit and how a limit may be increased.

    What is a credit card limit?

    A credit card, which is a type of revolving credit account, comes with a credit limit assigned by the lender. This limit is the maximum amount you can spend on your credit card, but note that you'll still have to make a required monthly payment. As you make purchases using your card, the cost of each purchase is subtracted from your credit limit. The amount you're left with is known as your available credit.

    How is a credit limit determined?

    Credit card limits can range from a few hundred dollars to tens of thousands of dollars, depending on a variety of factors including:

    • Payment history
    • Current accounts
    • Account history 
    • Debt
    • Income

    What happens if I go over my credit card limit?

    If your balance exceeds your credit limit, this is referred to as being overlimit. If you are overlimit, a few things could happen. Some credit cards may decline your transactions if you try to spend more than the remaining balance. But if the transaction goes through, this can put you over your credit card limit and you may be charged a fee, also known as an over-limit transaction fee. To help avoid going over your credit limit, you may be able to set up an alert with your card issuer.

    Can I increase my credit limit?

    In some cases, you can increase your credit limit on your credit card. If you're hoping for a credit line increase, the issuer will often check whether:

    • You make on-time payments
    • You make more than the minimum monthly payments or pay your balance in full
    • You recently had changes to your income
    • You have an appropriate credit score
    • ​ You have an appropriate credit utilization ratio
    • You have a long history with the account

    You can often request a credit limit increase online, over the phone or through a lender invitation. To submit a request online, sign in to your account and look for the option to submit a request. You may be asked to update your income information, which may be taken into consideration when evaluating your credit card limit increase.

    Aside from submitting a request online, cardmembers can call the phone number on the back of the credit card and ask a representative about eligibility. Similar to applying online, you'll likely need to provide the same basic information regarding your finances.

    Without making a request, some credit card issuers may approach you about a potential credit limit increase. Similarly, your credit card issuer may automatically increase your credit limit based on the factors mentioned earlier. If you're worried that you may not notice the increase in your limit, the issuer will typically let you know.

    In summary

    As you can see a lot goes into a credit card limit. In addition, there are several factors that might increase your chances at increasing your limit, and these factors align with healthy credit management habits.

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