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Your credit card limit explained

Your credit card limit explained

Your credit card limit is the maximum amount of money you can borrow on your credit card – the limit of credit you’re allowed to borrow. Your credit card limit is based on a number of things such as:

  1. How much you earn
  2. Any outstanding debts
  3. Credit history
  4. Access to other credit facilities
  5. Customer history

Credit limits on credit cards

Your credit card limit is the maximum amount of money you’re allowed to borrow on your credit card. For example, if your credit card limit is £2,000 and you’ve got an outstanding balance of £1,750, you can spend a further £250 before you reach your credit card limit. However, If you borrow right up to your limit, there’s a risk you could go over it when any interest is applied.

 

How your credit card limit is decided

Your credit card limit is based on:

  1. How much you earn and your disposable income after paying your household bills and other regular costs.
  2. Any outstanding debts, like mortgages, loans and other credit cards – and how they stack up against your income.
  3. Your credit history and how well you’ve previously managed credit – such as whether you’ve missed or made any late payments or gone over your credit limit.
  4. Access to other credit facilities, such as the availability of an overdraft on your current account or other credit limits on credit cards you may have as these could cause you to be over-indebted.
  5. Customer history - How you’ve managed any existing accounts with the lender you’re applying to.

 

How to increase your credit limit

If you aren’t happy with your credit card limit, you may be able to increase it. Think about why you want to increase your credit card limit. If it’s because you’re not handling your debt well, or struggling to meet your expenses and repayments, raising your credit card limit could add to the problem.

If you decide you’d like a higher credit card limit, and you’ve had the card for at least 3 months, MBNA may consider a request to increase your credit limit.

It’s important not to exceed your credit card limit. Doing so is likely to result in unplanned fees, as well as damaging your credit rating and the risk of losing any promotional rates currently on your credit card account.