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What Does Available Credit Mean?

4 min read

Published December 11, 2024

Table of contents

Key Takeaways

Your available credit is the difference between your credit limit and your current account balance.
You can track your available credit using alerts, so you don’t max out your card or go over your limit.
Keeping your available credit high and carrying a low card balance can help you improve your credit score.

As a credit card user, you may have spotted the term “available credit” in a message from your credit card issuer or in the credit card section of your online banking account. Your available credit is the amount of credit you have left to spend on your card. It’s helpful to understand this concept and its connection to your credit score so you can use your credit card responsibly to avoid impacting your credit score.

What’s your available credit on a credit card?

Your available credit indicates the total amount of credit you can currently access without going over your limit.

Subtracting your current balance from your credit limit on a credit card gives results in your available credit on that card. Some card issuers send you close-to-limit alerts or available credit alerts, so you don’t exceed your credit card limit and incur fees.

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Available credit vs. credit limit

Your credit limit is your spending limit on a credit card. If your credit limit is $4,000, this means you can spend a maximum of $4,000 using your card until pay off all or some of your credit card balance to replenish your credit. Lenders consider your previous credit history and score, your income, and other factors to arrive at your spending limit. A lender may agree to increase your credit limit if these factors change.

Your available credit is your credit limit minus your current balance. This is the amount you have before you reach your limit and have no more credit to use. Using the example above: If you’ve used $1,500 of your $4,000 credit limit, you have a current available credit of $2,500.

When you have a zero balance on your credit card, your available credit equals your credit limit. As you use your credit card, your available credit gets lower until you make a payment. You can typically make payments anytime throughout your billing cycle, even if you don’t have a payment due, or you can wait until the end of your billing cycle to make a payment. At any time that your outstanding balance goes back to zero, your available credit will once again equal your credit limit.

Using your available credit

Available credit is a component of your credit utilization ratio, which in turn has a significant impact on your credit score.

The amount of credit in use at the end of your billing cycle (credit limit minus available credit) is what’s used to determine your credit utilization ratio. It’s recommended to maintain a credit utilization rate of 25% or less to help maintain a good credit score, according to the Office of Financial Readiness. A low credit utilization ratio lets potential lenders know that you don’t have too much credit card debt and you're not at risk of overextending yourself. Try these tips to keep a low credit utilization ratio:

When using your credit card, spend only as much as you can repay at the end of the cycle.
Try to pay off your balance in full and on time every month.
Avoid carrying a balance that is more than 30% of your credit limit.

Increase your available credit

You can increase your available credit by requesting a credit limit increase on a credit card you already have, or by getting approved for a new credit card.

A higher credit limit can help you accommodate more day-to-day expenses, larger purchases, and it may be useful during financial emergencies. A higher credit limit also improves your credit utilization ratio provided your spending remains the same.

If you have a good payment history, your card issuer may offer you a credit limit increase. Alternatively, you can request one, although approval is at the credit card issuer’s discretion.

Similarly, getting a new credit card increases your total available credit. It’s a good idea to ensure that any balances you carry across your credit cards are less than 30% of the sum of your credit limits. Remember, applying for a new credit line may knock a few points off your credit score temporarily, while increasing your credit limit has no such impact.

Did you know?

If you’re looking for a new credit card, compare Discover credit cards against other industry-leading credit cards to find the best fit for you. Find cards that reward you for purchases in the categories where you spend the most.

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Keeping track of your available credit throughout the month is part of responsible credit card use. It keeps you from going over your limit or maxing out your credit card account. It also allows you to maintain a low credit utilization ratio to build a good credit history. You can use spending alerts to keep track of your credit card balance and available credit so you can moderate your spending as needed.

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