Credit Card Limits: How To Manage

Credit card limits are unique, but how to manage them isn’t — you shouldn’t exceed your limit, and your access to capital depends on your bank and credit history.

Ruth Jackson-Kirby Published on 10 December 2020. Last updated on 20 January 2021.
Credit Card Limits: How To Manage

When you apply for a credit card, you will be given a credit card limit. This amount is the most you can spend on your card. You must understand your credit limit to avoid unnecessary charges and the impact it can have on your credit score.

What is a credit card limit?

Your credit limit is the amount you have been authorised to spend on your credit card. It is set by your lender and dictates how much debt you can build up. For example, if you have a £2,000 credit card limit and your balance is £1,500, you would only be able to put another £500 on your card.

What happens if I go over my credit card limit?

In general, you can’t exceed your credit card limit. Your credit card will be declined if you try to spend more than the remaining balance. However, sometimes these transactions go through, which will put you over your credit limit. You will usually be charged a penalty fee of up to £12 if this happens.

If you regularly exceed your credit limit, your card provider may lower your limit, close your account or remove any promotional interest rates you have. It can also affect your credit score.

However, if you usually manage your account well and accidentally exceed your allowance, it’s always worth contacting your credit card provider straightaway. If asked, they may waive the fee.

What credit limit should I expect?

Your credit limit is decided by your lender, which takes into account your income, credit score and existing debts and the amount of credit you can access. It is a personalised amount and thus varies, so there is no ideal credit card limit.

The average credit card limit is between £3,000 and £4,000. A high earner with a good credit score may get a limit of as much as £10,000, but somebody with a limited credit history or poor credit score may only get a credit limit of £1,000 or less.

You want to make sure you have a credit card limit that allows you to use your card as you wish but not build up a debt you can’t afford to repay.

How your credit limit affects your credit score

Your credit card limit can affect your credit score in several ways:

  • Searches. Your provider will search your credit report when you request a credit limit increase. This search marked on your report. Too many credit searches can damage your credit score as it looks like you are desperate for cash.
  • Available credit. Your credit limit appears in your credit report along with your outstanding balance. The difference between the two is your available credit. Lenders assess how much available credit you have when considering an application.
  • Exceeding your limit. Regularly exceeding your credit limit suggests you are having financial problems and can affect your credit score.

How do I increase my credit limit?

Many credit card providers consider increasing your credit card limit every six months. You can also request a credit limit increase by getting in touch with your card provider or filling out a form in your online account.

When assessing whether to increase your limit, your lender will look at your credit score, how you have used your credit card and whether you have paid your bills on time.

Sometimes card providers will increase your credit limit automatically, but you can ask them not to make this increase or request they reduce your credit card limit if you want to put your own limit on your borrowing.

About the author:

Ruth is a freelance journalist with 15 years of experience writing for national newspapers, magazines and websites. Specialising in savings, investments, pensions and property. Read more

If you have any feedback on this article please contact us at [email protected]