How credit limits work

Learn how to increase yours responsibly.

A credit limit is the maximum amount that can be charged on a revolving account. But how is that limit decided, and what can you do to increase it? Read on to find out.

Credit card limits depend on a bank or issuer’s policies and other factors, including an individual’s credit scores. In general, people with higher credit scores will qualify for higher credit limits. Those with lower credit scores will qualify for lower credit limits.

Some banks or card issuers allow you to spend more than the credit limit. However, you may be charged an over-the-limit fee, so make sure you’ve checked your card’s terms and conditions before you even consider going over your limit. Usually, it’s not a good idea.

How to increase your credit limit

The easiest way to increase your credit limit is to call the card issuer directly. You may also have the ability to make the request via your online account. This will depend on the bank or issuer. You will likely have to wait until the account is at least six months old.

Note that asking for an increase may affect your credit score. If the card company runs a credit check, a hard inquiry will appear on your credit report. (Hard inquiries usually occur when you ask or apply for something, like a credit increase or loan.)  If they run a soft inquiry or don’t run a credit check, your score will not be impacted. 

If you’re denied a credit limit increase, you can try again in a few months. 

In addition, sometimes, credit card companies will automatically increase your credit without you asking.

Benefits of a higher credit limit

Having a higher credit limit can help you tackle emergencies and sudden expenses. Let’s say your air conditioner conks out. With a higher credit limit, you could finance the purchase through your credit card, without having to apply for a new loan.

However, having a higher limit can also make it easier to get into more debt if you’re not careful. Credit limits are in place to help protect the customer from getting into trouble with debt. Banks have a responsibility to protect the customer, in part, by issuing these limits.

Make sure to pay off your bill in full every month, whenever possible. 

This page and the information contained herein is for educational purposes only. The information is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any product, service, or strategy to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any links to other websites are included for your convenience only. Bread Financial does not endorse any product or service, and is not responsible for the accuracy or reliability of the information, made available through such sites.