What is the average credit limit?

What is the credit limit?

Your credit limit is the maximum amount of money you can charge to a credit card before you face a penalty. A credit limit may also be known as a line of credit, credit line, or spending limit. Your credit limit determines how much you can charge to your credit card before you start racking up interest. In combination with how much you spend, your credit limit also determines your credit utilization ratio which is the ratio of the credit you use to your credit limit.

Usually, high limit credit cards are reserved for people with good or excellent credit. As a rule of thumb, you should be able to get a $5,000 limit if you have good credit and a $10,000 limit with excellent credit.

Highest average total credit limit based on generations:

Baby boomers (55-73) have the highest average total credit limits of any generation at around $40k across all credit cards, according to Experian data. Secondly, comes the Generation X (39-54) has the second-highest average total credit limit that comes around  $33.5k across all cards. Silent Generation (74+) has the third-highest average total credit limit which comes around $32.5k across all cards. Millennials (23-38) have an average total credit limit of $20.5k. Finally, Generation Z (18-22) the youngest generation has an average total credit limit of $8k across all cards.

How to get a high-limit credit card?

Usually, you get an increase in your credit limit by raising your credit score. Lenders typically set higher card limits for customers who have good or excellent credit scores. Credit card issuers determine your credit limit based on a variety of factors pulled from your application, credit reports, and their own internal information. Your exact limit will depend on how the issuer weighs the above factors. For instance, if you have a high income and low monthly housing payment, the issuer may feel more comfortable giving you a card with a high limit. Also, if you have a history of paying your bills on time and have good or excellent credit scores then your chances of getting a high limit card are much likely. Additionally, your history and current relationship with a particular card issuer can also matter. For example, if you have a $10,000-limit card with an issuer and want to apply for a second card with a $5,000 minimum limit from the same issuer, you might not be approved for the new card if the issuer is only willing to extend you $20,000 of total credit. In some cases, though, you may be able to request a reallocation of your existing credit limit to allow for approval of the new card. However, it’s also important to raise your credit score so you receive the best rates and can qualify for credit cards with better rewards programs. Few suggestions to improve your credit score include making on-time payments, paying your balance in full, and not opening too many accounts at once. 

How does a high limit affect my credit?

The amount of your available credit you use is one of the most important factors in the calculation of your scores rather than your credit limits. Credit bureaus will consider your credit utilization ratio, which looks at your total available credit compared to your most recently reported balances on revolving accounts. Using a lower percentage of your available credit is best for your credit scores, and having higher credit limits can make this easier. Making fewer purchases with your card can help you to maintain low utilization rates even with low credit limits.