Average Credit Card Limit

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We’re no strangers to credit cards in the U.S. The average credit card limit across the country was $22,589 in 2019. What many don’t realize is that as long as you don’t overspend, having a high credit card limit can be beneficial.

A high credit card limit can help lower your credit utilization rate which in turn boosts your credit score. Credit utilization represents the amount of money you’re borrowing out of your available credit. If you have total available credit of $10,000 and you’re only using $1,500, your credit utilization is 15% (the goal is to be below 30%). Low credit utilization is a key factor influencing your credit score. The less available credit you use, the more your credit score is likely to go up. A good credit score can help you get better credit cards, loans and mortgages.

Average Credit Card Limit By Credit Score

Your credit score can impact how large a credit limit a card issuer might grant you. As you show you’re a responsible borrower, lenders are more likely to increase the amount you can spend on credit.

Experian shows that the average credit card limit increases with high credit scores. See data from Q2 2019 below.

As you increase your credit score, lenders find you more trustworthy and issue higher credit limits.

How to Increase Your Credit Card Limit

You don’t need to wait for your lender to increase the spending limit on your card. As long as you’ve had the account for a few months, you can request an increase. Depending on your card issuer, you can either do this over the phone, by email, letter or their website. Have details about your income, employment and existing debts on hand. When deciding how much they’ll let you borrow, lenders look at how much you earn, how much you already owe and your payment history. If you recently got a pay raise or a side hustle, be sure to include that income.

Keep in mind that this request may lead to your lender doing a hard pull of your credit that could negatively impact your score.

When working out your credit card limit, lenders consider certain factors—factors that you have the power to change. Here are some steps you can take to improve your chances of obtaining a higher limit.

  • Increase your monthly payments: Lenders are more likely to grant an increase to those paying more than the minimum each month.
  • Wait until there are no missed payments showing on your credit report: Lenders are unlikely to offer an increase if you’ve missed a payment in the last six months.
  • Use your card for small purchases: A lender might refuse an increase if they feel that the account is mostly inactive.

In a nutshell, wait until your finances are in tip-top shape before applying for an increase.

How to Improve Your Credit Score

Up your chances of obtaining a credit limit increase by improving your credit score. When lenders see you as trustworthy (i.e. a high score), they’re more likely to give you a higher credit limit. Here are simple ways to boost your credit score:

  • Audit your credit report for mistakes and out of date information: The wrong information on your credit report can cost you money.
  • Pay more than the minimum every month: Lenders are unlikely to approve an increase if you’re carrying a balance.
  • Don’t apply for a lot of loans or credit products: Any application for credit results in a hard inquiry on your credit report and cause your score to go down temporarily.
  • Pay off some of your debts: Lowering the balance of your debt—even in the short term—can improve your credit score.

What to Do After You’ve Received A Credit Limit Increase

Congratulations! You were awarded a credit limit increase. What now? The trick is not to be tempted to max out your credit card. Keep your utilization low to improve your credit score and keep your spending in check.

With a higher spending limit, manage your credit wisely. If you struggle with existing financial commitments, be careful with a larger credit limit. Don’t spend more than you’re able to pay back. Don’t forget—you can refuse a credit limit increase too. And you can always ask for your limit to be reduced if you’re trying to curb spending. Keep your credit card increases available for emergencies or to help you strategically build credit. To keep an eye on your credit utilization, log in or sign up with Turbo.

Sources: Barclay | Experian 1, 2, 3, 4, 5Forbes | Investopedia | The Ascent | The Washington Post

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