How do credit limits work and what limit can I get?
Your credit limit is the maximum amount of money you can borrow with a credit card at any one time. The credit limit you're approved for is based on a mix of factors including your income, assets, expenses, credit history and personal circumstances.
Sometimes you can request a credit limit when you apply for a card. But as credit limits are subject to the credit card company's lending criteria, there's no way to calculate your exact limit in advance. All you'll know for sure is that if your application is approved, you'll get at least the minimum credit limit for that card.
What is the minimum credit limit?
The minimum credit limit is the smallest amount of credit you can get with a particular credit card. In Australia, the minimum credit limit can be as low as $500 or over $10,000 depending on the card.
💡Tip: If you want a particular minimum credit limit, you can filter and sort Finder's comparison table to see different options.
What factors can affect my credit limit?
Whether you’re applying for a new credit card or want to increase your existing card’s credit limit, the bank or provider will look at a range of factors to assess your application. This usually includes:
Your salary and any other forms of income you receive help credit card issuers decide on the amount of credit that's affordable for you. Credit providers must assess your ability to repay potential debt within a 3-year period. As your income affects how much you can repay, it will have an impact on your approved credit limit.
Your employment situation can affect your credit card application and the credit limit you'll be offered. This includes if you're full-time, part-time, casually or if you're self-employed.
If you're a student or receive a pension or income from sources other than employment, it can also affect the size of the credit limit you're offered.
Lenders factor in your financial commitments when you apply for a new credit card, including rent and mortgage payments, utility bills, groceries and other essential expenses. They also ask for details about any credit cards or personal loans, and any other regular spending. Along with your income, this helps them get a sense of how much you already spend (and how much money is left over).
This factor is based on your credit history and credit score, which helps issuers see your existing credit liabilities (including credit limits on other credit cards or loans). Your credit history also contains your repayment history, which can show if you're responsible with your money.
Before you apply for a credit card or request a credit limit increase, check that your credit score is in good standing. You can get a free copy of your credit report and score through Finder.
Many credit cards list minimum and maximum credit limits, which can give you some idea of the limit you may be offered. For example, if you're approved for a credit card with a minimum limit of $1,000 and a maximum limit of $10,000, the specific limit offered to you will be within this range.
Your credit limit request
If you have a credit card already, you can request a credit limit decrease or increase at any time. Some credit card applications also allow you to request a specific credit limit for a new card. As long as it fits within the minimum and maximum range for that card, the issuer will consider this when looking at your application. Whether it's an existing card or a new card, the request will still need to meet the issuer's credit lending requirements to be approved.
What is an online credit card limit calculator?
Online credit card limit calculators can give you some idea of what your credit limit might look like. Unfortunately, you can't determine exactly what your credit limit is and you can’t be entirely sure of how your credit card provider will calculate your limit.
If you do use an online credit card limit calculator, keep in mind that the result is only an indication of what limit you could get, and don’t expect your card provider to rely on similar parameters. At the end of the day, it’s your card provider who establishes exactly what your credit limit should be.
How can I calculate my own credit limit?
There's no way to work out the exact credit limit you'll be offered, but you can estimate the credit limit you might be offered by using the following questions:
- How much do you earn? Goes without saying, the more you earn, the higher your credit limit will be. Most banks have a minimum income to apply for each credit card, and a minimum credit limit. For instance, on a card with a minimum income requirement of $75,000, their minimum credit limit typically sits at around $6,000.
- What are your current, regular expenses? This could include rent or mortgage repayments, supermarket shopping, electricity bills, phone bills and fuel or transport costs.
- How much money is leftover from your income after you've paid your essential bills? If you earn $5,000 per month and spend $3,000 on bills, that leaves you with $2,000 'disposable income' for other spending, including credit card payments.
- How much money do you want to spend on your credit card? Consider what you want to use your credit card for. Is it to fund a holiday or help with cashflow for everyday purchases? It's easy to end up with a credit card debt in a short period of time, so it might be best to start with a lower credit card limit to begin with.
Alternatively, you could request a specific credit limit based on your budget, or use a credit card repayment calculator to get a sense of what's affordable.
Want a better way to check your credit score? The Finder app updates your score automatically each month and lets you know if it changes. Pop in your phone number below to get your download link.
How can I increase my credit limit?
If you already have a credit card and want to increase your credit limit, you can usually submit a request online. Your bank or provider will assess your request based on its lending criteria. To help increase your chances of approval, here are some steps you can take before you request a credit limit increase:
- Establish creditworthiness. If you can prove that you’re a reliable borrower, there’s a good chance that the lender in question would approve your credit limit request. Make timely repayments and try to pay off as much as your balance as possible each month.
- Don’t exceed your credit limit. If you’ve gone over your card’s limit once or more in the past and didn't immediately pay it back, this is not a good sign to your lender. Instead, keep your spending in check and stay within the card's available limit.
- Use your card regularly. Making purchases with your credit card and repaying them on time helps show that you're managing your card responsibly, which lenders may consider when assessing your request for a limit increase.
- Talk to the lender. In some instances, discussing your need for an increased credit limit directly with the card provider might help. If nothing else, you should at least get a good indication of what your provider expects.
- Be patient. If you've just got a new credit card, wait at least 6 months before you consider applying for a credit limit increase. This helps you build a relationship with the provider. And if you make all your repayments on time, it can even improve your credit score.
Want to lower your credit limit?
If you want a smaller credit card limit, you can request a credit limit decrease online or by calling your credit card company. Just make sure the limit you request is higher than any balance you have on the card.
For example, if you owed $5,000 on a card with a $10,000 credit limit, you couldn't request a $2,000 credit limit because it would mean you owe more than the new limit.
What to watch out for when changing your credit limit
Increasing your card’s credit limit gives you access to more money when you need it and decreasing it can help you keep your expenses in check. In either case, it is important that you account for the following.
An increased credit limit translates into you getting more money to spend, and this could lead to a build-up of debt that you may have issues repaying. The higher the credit limit, the higher the chances of overspending.
If you have an outstanding balance on your card that rolls over from one month to the next, it will attract interest. An increased credit limit has the potential to increase the outstanding balance, which would lead to higher interest charges. So if you don’t pay your account’s balance in full every month, a credit limit increase might not be a good option right now.
An increased credit limit gives you more spending power but also means you could have a bigger balance to repay. If your balance and any interest charges get to a point where you can't repay at least the minimum amount listed by a statement's due date, you risk defaulting on the account. But contacting your credit card provider when you have concerns about repayments can help you work out a solution.
Frequently asked questions
How much time does it take to apply for a credit limit increase?
With credit card providers that accept online applications for increase in credit limit, you can complete your application in around 5-10 minutes, provided you have all the required information close at hand.
How much time would the card provider take to review my application?
This can vary from one card provider to the next, where while some inform you of their decision almost immediately, some others can take a few days.
Are all credit card holders eligible for credit limit increases?
New credit card accounts typically don’t qualify for credit limit increases, and you’ll have to wait for 6 to 9 months. Once you get an increase or decrease in your credit limit, you cannot ask for another one in the next 3-6 months, depending on your provider.
Can I request a specific increase to my card’s credit limit?
Yes, you can, but this should be within the maximum allowed limit of the given card, and it remains subject to approval.
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