Credit Limits: How Much Will You Get On A Credit Card?
Credit cards may offer you more financial freedom, but how much you get depends on the limit assigned once you have been approved for a card.
The credit limit is like a budget for your card, allowing you to carry a balance up to that amount and adjusting what you can spend on the card accordingly.
This means someone who has reached their credit limit will not be able to put more charges on the card, while someone who has a balance that is half of the limit will still have half their credit left to spend.
Most credit card issuers have a section in their applications where people can request a certain credit limit or range, which gives people some input into this essential credit card feature.
The Better Banking Reforms in Australia have even made it an essential application feature to help reduce the chances of people getting a limit they feel is too high.
But this does not mean you will get the limit you request. An issuer might decide the requested limit is too much of a risk and deny the application or offer a lower limit based on other factors.
The amount of control issuers have makes it clear that the real advantage to requesting your credit limit lies in controlling how much you spend.
People who are worried about having a high credit limit, for example, might want to request a low credit limit so that there is less chance of debt becoming a problem.
What Affects Your Credit Limit?
There are a number of variable factors used to determine what kind of credit limit you get, and while the assessment criteria and process may vary between issuers, the following three points always come into play:
- Your salary and assets
- Your credit history; and
- The kind of card you are applying for
In most cases your salary and assets will play the biggest role, followed by your credit history or credit score.
But the card you are applying for can also help decide your credit limit, with more premium options offering more credit.
A standard low rate credit card, for example, may only offer credit limits up to $5000, regardless of whether a higher limit would be manageable for the person applying.
A platinum credit card, on the other hand, will offer a much higher credit range because the card is a more exclusive option designed for people with higher incomes and solid credit history.
While there is no definitive answer to the kind of credit limit you can get, looking at different kinds of cards and requesting a credit limit range when you apply will give you more control over credit card convenience and management right from the start.
That way you are more likely to stay on top of repayments and still get as much as possible out of using the card.