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What Is a Credit Card Spending Limit?

Last Updated: September 12, 2024

6 min read

Table of contents

Credit card limits

What impacts your credit card limit?

How to set your own credit card limit

How to manage your spending with a personal credit card limit

Why set a personal credit card limit?

Key points about: credit card spending limits

A credit card company determines your credit card limit.
Even though credit card issuers approve card limits, it may not be in your best interest to always spend up to your credit limit.
You can put a limit on spending by setting a personal spending limit on your credit cards.

Sometimes pushing limits can help you reach your goals. Other times limits create necessary boundaries that help you successfully navigate life. For example, staying within the boundaries of a budget can safeguard your financial health and growth. This includes the way you use your credit card. You can apply your personal spending goals to the amount you allow yourself to charge on your card, helping you responsibly manage your credit based on what you decide you can comfortably afford. This guide to credit card limits explains just how to get started.

Credit card limits

When you get a credit card, the issuer gives you a credit limit—the total amount of money you’re allowed to spend on your credit card. For example, if your credit card limit is $1,000, you can spend up to $1,000 on purchases (you don’t have to spend it all at once) before you run out of available credit on your card. You’ll have to pay back some or all of your credit (plus any interest you’ve accrued) to free up your credit and continue using the card.

Your credit card issuer sets a credit card limit (or credit line) based on what they think you’ll be able to pay back. Sometimes, as your credit history changes, the credit card issuer may increase or decrease your credit limit to match the amount of risk they think you present as a borrower. Even though your credit card company sets a credit limit for you, that doesn’t mean charging that amount is in your best interest. You might feel your credit line gives you too much spending flexibility and worry that you’ll struggle to pay it off should you spend up to the limit.

You can decide on a credit card spending limit help keep you within your budget. Because this spending limit is personal, you can set it based on your needs. If you’re struggling to cover your debt because of your card’s interest, you may consider a credit card balance transfer.

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What impacts your credit card limit?

Several factors can impact your credit card limit, including your credit score, credit balances, and income.

You’re likely to get approved for a higher credit limit if you have a higher credit score (the three-digit number that grades your credit report) because lenders may see you as a lower-risk borrower.

The balances you carry on your credit cards may also be a factor credit card companies consider when determining your credit limit. Maintaining a balance on your card contributes to the overall amount of credit you use. Experian^® recommends keeping your credit utilization as low as you can.

Your income is another important factor. If you have a higher income, you have a better chance of being approved for a higher credit limit, as lenders may believe you can more easily repay your debt.

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How to set your own credit card limit

While credit card companies determine your credit limit, it’s a good idea to choose your own spending cap within that limit.

Setting a spending limit on a credit card isn’t necessarily a formal process. It’s likely not a good idea, for example, to contact your lender and request a lower limit, as this may increase your credit utilization ratio. Instead, consider your personal budget and your financial habits. How much money could you reliably pay off each month? Are there certain types of expenses that tend to push the limits of your budget? If you’re not sure, try tracking your spending for a month.

You might determine your personal spending limit in a few ways.

Base it on your credit limit. If your spending stays below a set percentage of your credit limit, like 30%, you may be able to minimize the impact on your credit score.
Set a weekly budget. A weekly credit card spending limit—whether that’s $10 or $100—may be more manageable than a monthly limit for some people.
Treat your credit card like a debit card. That means spending only what you have the cash to cover and quickly repaying your balances.

You may also want to keep interest rates in mind as you determine your spending limit.

How to manage your spending with a personal credit card limit

After you set your credit limit, you can use various tools to help manage your spending and stick to your goal. But first, it can help to reinforce your boundaries. A great way to do this is to set mobile spending alerts. Some credit card and budgeting apps let you set spending limits on transactions and balances. If you go over your transaction limit, you’ll receive a notification.

Once you safeguard your personal credit limit, you can use these strategies to stay on track.

Create and follow a budget: Rather than spending haphazardly, a budget helps you create a plan for how you want to spend your hard-earned dollars. If you don’t already have a budget, there are a variety of budgeting apps that can help you build one.
Manage your credit card account using a mobile app: Many credit card companies have a mobile app you can download and use to keep an eye on your account. You can check your balance, review transactions, make payments, view credit card statements, and more. Regularly monitoring your account can offer awareness that helps you successfully navigate your borrowing.
Use a mobile app to learn more about your spending: Some apps will sort your credit card purchases into categories, such as groceries, restaurants, and entertainment. You’ll know exactly where your money goes and can adjust your spending as needed.

Why set a personal credit card limit?

Rather than spending until you reach your credit card limit, setting a personal limit can help you establish realistic and responsible spending habits, not to mention the potential to save on interest. And by keeping your credit utilization low, you can grow your savings, build your credit history, and secure future investments.

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