Highest credit card limit

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highest credit card limit

There is no "golden rule" on how high of a credit limit an individual should have. There are 22 year olds that have $100,000 credit limits and 40 year olds that have $1000. The most important thing is to not over spend and pay your balance(s) in full every month. Seeing as you are doing that now, there is no downside to getting an increase.

As long as you're not trying to get a higher limit in order to actually spend more money, or might be tempted to do so, it's generally advantageous to have a higher limit if available. A large part of credit score is based on utilization rate (balance due at statement closing divided by credit limit). Basically, you want more than 0% and less than 30% or preferably less than 10% used. Doubling your credit limit halves your utilization rate. And it can be comforting to have it there "in case you need it" in some sort of emergency scenario.

  • Some credit cards do a "hard pull" of your credit report if you ask for a higher limit. This can lower your credit score slightly for a short time, though generally isn't a big deal unless you're requesting more credit all the time.
  • It's conceivable that for some larger credit application that isn't entirely score based and has more human oversight, like for a mortgage, if you have a lot of unused credit, you may be asked about it, and potentially even asked to have some credit limits lowered. Basically, if you could at any given moment suddenly get in debt for hundreds of thousands of dollars, that might look like a risk to the bank you're now trying to get a loan from. This isn't that likely to actually happen, especially if your credit history shows you generally being responsible, but it's not completely unheard of.
  • If you ever get in the mindset when you charge something on a credit card that "I'm not really spending the money now," you can be in a world of pain very quickly. This can be compounded if you have high limits, and don't realize how much you're spending. Credit cards are very useful tools, but money you spend on them is as much spent as if you paid for it with any other technique.

There's no "right" or "default" amount of credit that you "should have" at any given point in your life. If you're using credit responsibly, and don't need more credit, there's no particular reason to ask for more credit. If you work at it and are patient, it's easy to eventually have tens of thousands of dollars of unused credit limits, but that doesn't really get you anywhere you need to be by itself.


Credit Card Limit: Are You Getting What You Deserve?

In this credit cards 101 type post, I thought I’d share what I know about your credit card limit.

When you are issued a credit card, you are assigned a credit card limit. This is the highest balance you can spend on the card. Anything spent above this amount will incur an above-the-limit fee. Your initial credit card limit is based on your income and credit history.

Highest credit card limit

Charge Cards Like the ZYNC from American Express(sm) Have No Pre-Set Limit

Some credit cards do not come with a limit. American Express charge card, for instance, don’t allow you to carry your balance forward. For that reason, you don’t really have a limit on your spending within the month. After all, you’ll be paying it all off. What do they care how much you spend. However, I’ve heard that although there is no stated, pre-set limit, you will receive a notification when you’ve reached a “soft” limit, based on your history of spending with the card.

As a response to the recent “credit crunch” the financial world felt, the credit card companies began lowering credit card limits. You may have experience this last year. Some consumers felt as if this was done without merit to their accounts. My limit was lowered on a card I wasn’t using. I wouldn’t care except I know it affects my credit score. Here’s how…

One of the factors involved with calculation your FICO credit score is your “amounts owed”. This is judged based on the amount owed compared to the amount available. Therefore, if you have a high credit card limit, any balance you carry will pale in comparison to your high limit. It’s recommended that you keep your balance to 25% of your overall limit. Having a higher limit will help your credit score. For this reason, charge cards, which might report a limit of $0, are often considered bad for your credit score.

Considering the effect the credit card limit has on your credit score, you might want to try and raise it to it’s highest level. Credit card companies will naturally raise your limits over time as your payment history builds up. But you can also call them and request a credit limit increase. Make sure you ask them to only do a “soft pull” of your credit history. Some online portals allow you to do this as well. Takes just a few minutes and could really help your score.

Do you have a recent experience dealing with your credit card limit? Share it in the comments below…

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Philip Taylor, aka "PT", is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!

@James – that’s an interesting approach. it shows that personal finance is truly personal. you should do what works best for you.

every so often i get a notice saying my credit limit has been increased and i call them up right away and tell them i don’t want my limit increased.

i personally feel my limit is high enough and just because they want me to spend more i don’t see a need to do so.

find a limit that works for you this way you can buy what you need but you don’t get out of control.

Oops on my comment above.

I meant that it’s a script to increase your credit card limit and lower your interest rate. We learned it at a Rich Dad Poor Dad seminar.

A good idea is to use other methods besides just a credit card. Debit cards should be used for smaller, more maneagable purchases so that you can keep your credit cards open for emergencies and you can keep that balance near 25% of the overall limit.


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