A credit limit is the maximum amount you can spend on a credit card or line of credit at a given time. Your credit limit is based on various factors, such as your creditworthiness and the type of card you’re using. If you reach your limit, your issuer may decline transactions or charge you a fee – this can depend on whether you’ve opted into the ability to go over your credit limit.
Here's what you need to know about credit limits.
Where can you find your credit limit?
When you’re approved for a new credit card, your issuer will tell you the limit. You can usually also find it on your statements or by logging into your account online.
If you’re not sure what your limit is or are having trouble locating it, you can always call your card issuer.
How is your credit limit determined?
Many factors go into determining a credit limit. Factors such as your income, credit limits on other accounts debt-to-income ratio, timely payments, utilization and other factors are considered by credit card issuers. Issuers like to see that your existing debt is low relative to the amount of money you make. If a card issuer determines that your creditworthiness has improved, they may consider you for a higher credit limit.
What if you exceed your credit limit?
If you reach or exceed your credit limit, new transactions may be declined.
You may be charged an overlimit fee only if you’ve opted in to permit the card issuer to allow charges over you card limit. Your minimum payment may increase by the amount you’ve exceeded your limit. Because credit utilization is part of your creditworthiness, exceeding your limit can even impact your creditworthiness.
These consequences can vary based on the credit card issuer, so check the terms of your credit card agreement to understand the consequences of going over your limit.
Can your credit limit change?
Your credit limit is not set in stone. If you use your card responsibly – paying off your full balance and not carrying debt – your issuer may even increase it automatically.
You can also request an increase. If your accounts are in good standing, you have a positive payment history or your income has increased, it may be approved. Lenders may have requirements about how long your card has been open or how often they approve a limit increase. For example, you may need to have your account open for at least 3 months to request an increase, and you may only be able to request an increase once every 6 months.
Your credit limit can also decrease. If you miss deadlines, only make the minimum payment or regularly max out your card, your issuer may lower your credit limit. Larger factors like the economy can also come into play. If you don’t understand why your limit was lowered, call your card issuer to get clarity.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
