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According to Experian, the average American can run up a balance of almost $30,000 on their credit cards, which is quite a significant amount.
Some of the best credit cards may offer higher credit limits, though they vary from card to card and person to person. Limits tend to increase as you get older and earn more, and then decrease again in retirement.
If you’re wondering how you compare, look at the averages for your generation rather than the overall figure.
How credit card limits work
Your credit card limit is the total amount you can spend on your credit card. So, if you have three cards, each with a limit of $5,000, your total limit would be $15,000. Your card issuer might increase your limit if you’ve had the card for a while and always made on-time payments.
Card companies sometimes decrease limits too, particularly if they think you might not be able to pay back what you’re spending. That might be because you’ve missed a few payments or are running a high balance. Credit card limits can also decrease when there are dramatic economic shocks, such as the start of the COVID-19 pandemic.
Credit card limits often change as you get older
The average credit card limit in America is $29,855, according to Experian’s most recent data. There are some pretty big swings hidden within that figure — Gen Z average around $13,000 and baby boomers average almost $42,000.
Check out the credit card limits by generation:
| Generation | Average Credit Card Limit (Q3 2023) |
|---|---|
| Generation Z | $12,899 |
| Millennials | $27,533 |
| Generation X | $38,665 |
| Baby boomers | $41,906 |
| Silent generation | $32,812 |
There are ways to increase your credit limit
If your credit card limit is not where you want it to be, don’t despair. If your card issuer hasn’t increased your limit on its own, there are a few proactive steps you can take:
- Contact your credit card company: You can often apply for an increase by phone, in a branch, or online. You will be in a better position if your credit score or financial situation have improved.
- Apply for a new credit card: Think about how many credit cards you have and when you last applied for a new one. If you think you can qualify for a card that you’ll use and benefit from, this may be a good way to increase your limit.
Be aware that asking for an increase may result in a hard credit check, and applying for a new card definitely will, which can dent your credit score.
Does your credit limit matter?
It’s easy to get mixed up with all the different credit-related terms out there. The number that really matters is your credit score. This can impact the rate you get when you borrow money, among other things. Your credit limit is different.
Even so, there are a few ways that a high limit can be advantageous.
It can help improve your credit score
One of the factors that goes into calculating your credit score is something called “credit utilization.” This is the percentage of your available credit that you’re using. So if you have a credit limit of $10,000 and an average balance of $4,000, your credit utilization would be 40%.
Having a lower credit utilization ratio — ideally less than 30% — is good for your credit score. There are two ways to reduce your ratio: 1) By paying down your balance or 2) By increasing your credit limit. If you had a credit limit of, say, $15,000 and a balance of $4,000, your ratio would be 27%.
It can be easier to pay for big purchases
Having a high credit limit means you’re better able to swipe for big ticket items. Let’s say you’re refurbishing your kitchen and want to spend $10,000 on new appliances. Perhaps you have a top cash back credit card that also gives you purchase protection and perks. You won’t be able to make the most of those benefits if you don’t have enough spending capacity on your card(s).
Higher credit limits aren’t automatically a good thing
Before you call your card company to request a higher limit, bear in mind that there’s one big disadvantage to having access to all that credit: You might run up an unmanageable balance. If you have had difficulties with credit card debt in the past or aren’t confident you can limit your spending, stick with a lower credit card limit.
Imagine owing $30,000 on your credit cards, all with APRs of over 20%. The monthly interest on that debt would be around $500 a month. If you paid off, say, $800 a month, it would take you five years to pay down. And in that time you’d pay over $17,000 in interest charges.
Bottom line
Credit card limits are not a competition. If your limit is higher or lower than the average, don’t sweat it. What matters is whether you have enough credit to use for the purchases you want to make.
If not — and you are confident you can handle a higher limit — it might be worth calling your card issuer to see if you can get an increase.
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