The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired.
Your credit limit is the maximum amount you can charge on your credit card, as determined by the issuer. This limit is typically communicated to you in your welcome packet or via email upon approval.
Initial credit limits can range anywhere from $500 to $10,000, depending on factors such as the type of card, your credit score and more. Secured credit card accounts typically require a cash deposit, and the credit limit is related to the amount deposited. Most regular credit cards are unsecured accounts, so their credit limits are not based on any type of deposit.
Lenders typically determine your credit limit by reviewing your credit reports and considering factors like credit score, credit history and debt-to-income ratio. A higher credit score shows you have a good track record of paying your debts and being financially responsible, so your credit limits may be higher.
While your total credit limit caps your overall spending, your actual borrowing capacity can vary by the type of transaction. You can typically use your full limit for regular purchases. However, cash advances and balance transfers are usually subject to lower, restricted percentages of your total credit line to limit the bank's risk.
For example, a $15,000 limit means you can use up to $15,000 on purchases. Purchases also offer a grace period, meaning no interest is charged if you pay your statement balance in full by the due date.
Cash advances are highly restricted and usually capped at 10% to 40% of your total credit limit, meaning you can withdraw $150-$600. They come with upfront fees and start accruing high-interest rates immediately, with no grace period.
While balance transfers are often allowed up to your standard purchase limit (minus the transfer fee), this depends entirely on your available spending limit. They generally offer a lower promotional APR but are subject to a 3% to 5% transfer fee.
Kindly note that every time you make a purchase, take out an advance, or initiate a balance transfer, your total available credit decreases by the exact amount of the transaction plus applicable fees. You can check your credit card limit quickly through your bank's mobile app, your online account, or by reviewing your monthly statement.
Using your credit limit responsibly by making regular purchases and paying at least the statement balance on time demonstrates to lenders that you can handle more credit. Over time, this can lead to automatic credit limit increases without submitting a formal request.
