What Is the Average Credit Card Limit in the US?

A credit card limit is the maximum amount you can spend on a card before you need to pay the card’s balance. The average credit card credit limit in the U.S. is $33,980, according to the most recent data from Experian. However, credit card limits vary widely. If you’re new to credit or rebuilding your credit, you may have a significantly lower credit card limit. 

Credit card issuers determine your credit limit by reviewing factors such as your credit score, payment history, income, credit utilization, and monthly expenses. By understanding exactly what they're looking for, you can increase your chances of getting approved for a higher credit limit. Here's everything you need to know.

Key Points

• A credit limit dictates how much money you can owe on a single credit card at any one time.

• Factors such as your income, credit history, existing debts, and credit score determine your credit card limit.

• Issuers may increase or reduce your limit if your credit risk changes.

• Exceeding your limit may result in fees, declined transactions, and lower credit scores.

• Keeping a low credit utilization ratio directly increases the likelihood of a credit card limit increase. 

Low vs High Credit Limits

For every credit card account you have, you can see your credit limit (also known as your available credit line) on your credit card statement. This is the maximum amount you are allowed to spend using the card. If you don’t have much credit history, you’re likely to have a lower-than-average credit limit. As you build your credit profile (by making on-time payments and fully paying off your balances), your credit card limit may increase.

A low credit limit isn’t necessarily bad, but it can make it hard to pay for large purchases, such as furniture or vacations, with credit. lt can also impact your credit utilization rate (the percentage of your available credit you use at any time), which is part of your credit report and influences your credit score. 

Generally, you want to keep credit utilization under 30%, since going over that threshold could negatively affect your credit scores. That means if your credit limit is $1,000, spending over $300 on the card would result in a higher-than-recommended credit utilization ratio.

If you have a high credit limit, on the other hand, you’ll be able to make large purchases without worrying about exceeding your spending limit. Higher credit limits may also make it easier to keep your credit utilization low. This can have a positive impact on your credit, which may make it easier to qualify for other loans (such as a mortgage or car loan) with favorable rates and terms.

Recommended: Credit Scores: What’s Involved in Calculating and Building Your Credit

Factors That Determine Your Initial Credit Limit

Many factors determine the credit limit you're given when you get approved for a new credit card. The card issuer will look at your employment status and annual salary, as well as your monthly expenses (such as rent, mortgage, and other debts). In addition, they will check your credit reports to see your credit utilization, payment history, debt-to-income ratio, and credit scores. 

The issuer will use all this information to determine your credit limit — the maximum amount of credit card debt they think you can manage.

How Is Your Credit Limit Decided by Credit Card Issuers?

Here’s a closer look at the factors that credit card issuers look at when determining your credit limit.

Your Credit Scores

A credit score is a three-digit number, typically between 300 and 850, designed to represent your credit risk, or the likelihood you’ll repay your bills on time. Credit scores are calculated using sophisticated algorithms based on information in your credit reports. Score ranges vary depending on the model but generally follow these guidelines:

• 300-579: Poor

• 580-669: Fair

• 670-739: Good

• 740-799: Very good

• 800-850: Excellent

Credit card issuers will look at your credit scores to determine whether to approve you for a card, as well as what your credit limit will be.

Your Income and Debt-To-Income Ratio (DTI)

Your household income includes not just your employment income but also that of your spouse, as well as any child support, alimony, investment income, and most government benefits.

Your DTI ratio is the total amount of your recurring monthly debt payments divided by your gross monthly income, multiplied by 100 to get a percentage. When your DTI ratio is lower, you have more capacity to repay debt, and card issuers are more likely to grant you a larger credit limit. 

But if you have a relatively large amount of debt relative to your income, you’re more likely receive a lower credit limit.

The Card Issuer’s Policies and Goals

The process of determining a cardholder’s credit limit and other credit card terms varies from company to company. While they all generally look at credit scores, credit card performance history, and income levels, each company actually has its own mathematical formulas based on its own testing and analysis. For example, some issuers will look at limits that exist on an applicant's other credit cards, while others won’t. The actual formula is proprietary, since it's the way that the credit card company makes its money.

Your History With the Card Issuer

Once you have a credit card, your spending limit on that card will (at least in part) be based on your payment history on that card. If you use your credit card responsibly, make your payments on time, and avoid carrying a balance whenever possible, the issuer may reward you by automatically giving you a higher credit limit or inviting you to request one. 

Current Economic Conditions

Card issuers don’t approve applications and grant credit limits in a vacuum; they also consider current economic conditions. When times are bad, or companies fear the U.S. economy may be headed into a recession, they may tighten cardholders’ credit limits. In good economic times, on the other hand, they’re more likely to offer higher credit limits. 

Common Ways to Try to Increase Your Credit Limit

While some aspects of your credit limit are out of your control, there are some things you can do to increase your credit limit. 

Update Your Income Information

Your credit card’s credit limit is likely based on the employment and income information you provided when applying for the card. But if your income has increased since then or you didn’t state your total household income on your application, you may want to update this information and request a larger line of credit. 

Build Your Credit

As you add positive information (such as on-time payments) to your credit reports and build your credit, you’ll likely qualify for a larger line of credit. Card issuers typically monitor cardholders' credit reports and scores, so building your credit could lead to automatic credit limit increases.

Request an Increase

Credit limit increases aren’t always automatic. Sometimes you have to ask for them. However, it may be a good idea to wait until your credit scores or income have increased, your rent/housing costs have decreased, and/or you’ve proven your ability to pay on time and use your card responsibly. With some card issuers, you can request a credit limit increase online. Others may require you to call and speak to a representative. 

Transfer Your Available Credit

If you hold multiple accounts with the card issuer and need a higher line of credit with a particular account, you may be able to transfer credit from one line to another. This can mean reducing the line of credit on one account or closing an existing account and transferring all the credit to another account.

The Takeaway

If you’re new to the credit card game, you may have a lower-than-average credit card limit. However, by knowing exactly what numbers card issuers use to calculate your limit — and doing what you can to improve those numbers — you should be able to increase your line of credit. A higher credit limit allows you to put larger purchases on your card and helps improve your credit utilization ratio, which can help you build better credit.

If you’re in the market for a new credit card, Lantern by SoFi can help. With our online marketplace, you can shop for different types of cards (including credit-building cards and cards for poor credit) and compare multiple credit card options in one place.