Is it good to have a high credit limit?

[bjl584]

Is it good to have a high credit limit?

Yahoo Personal Finance · Getty Images

Ben Walker (CEPF, CFEI®) · Senior Writer, Credit Cards
Updated Tue, July 15, 2025 at 6:46 PM EDT 6 min read


A high credit limit can help your credit score because it could lower your credit utilization ratio, or how much of your total available credit you use. Lenders typically want to see you use 30% or less of your available credit.

On the other hand, having more credit could lead to increased debt because of the additional spending power.

Let’s explore the pros and cons of high credit limits and see if a high-limit credit card, like a travel rewards card, makes sense for you. Pros of having a high credit limit

Lower credit utilization


Since lenders typically like to see you use 30% or less of your available credit, having more total credit is an easy way to lower your credit utilization ratio.

For example, making a $200 purchase on a card with a $500 limit would use 40% of your available credit. If you were to make that same purchase on a card with a $2,000 limit, you would only use 10% of your available credit.

Your credit utilization affects your credit score, so it’s important to avoid using close to your max credit card limit in most cases. Keep an eye on your credit utilization rate to build toward a higher credit score. More purchasing power


With more available credit, you can buy more things. That doesn’t necessarily mean it’s time to go on a shopping spree, but having more spending power for your everyday needs is nice.

For instance, a higher credit limit could be helpful if you recently moved into a new home and need to buy furniture. More rewards


Earning more cash back, points, or miles can be a welcome byproduct of having a higher amount of credit. Using the example above, if you have enough credit to buy new furniture, you can also earn rewards for purchasing that furniture if you have a rewards credit card.

Earning rewards on everyday spending might not mean much on one or two purchases, but it can add up over time.

For example, the most recent Consumer Expenditure Survey (U.S. Bureau of Labor Statistics) shows that the average U.S. household spends $25,096 on food, transportation, and entertainment annually. With a 2% cash-back card, you could earn over $500 on that amount. Emergency funds


It might seem cliche, but you never know when disaster will strike. A credit card can act as a temporary emergency fund if you need immediate car repairs, a flight home, or any other number of things. Cons of having a high credit limit


There’s generally little downside to having a high credit limit. However, whether having more credit makes sense for you depends on your spending habits. Potentially more debt


Having a high credit limit or increasing your credit limit doesn’t make sense if you:

• Already have credit card debt
• Have a history of overspending

Both of these scenarios could lead to more debt if you were to have more purchasing power. So, while it’s generally recommended to use credit cards to increase your financial opportunities, they aren’t a good fit in every situation. Hard credit check


You can typically increase your overall available credit by receiving a credit limit increase on an existing card or by opening a new credit card.

One thing to note is that requesting a credit limit increase (not receiving an automatic increase) could result in a hard inquiry, while applying for a new credit card almost always results in a hard inquiry.

This type of credit check into your credit history could negatively impact your credit score in the short term. How to increase your credit limit


Here are some ways you can increase your available credit: Request a credit limit increase


If you have an existing credit card, you can request a credit limit increase from most card issuers. That typically means calling your credit card company or requesting a credit line increase online.

For example, Capital One allows you to request a line of credit increase through your online account via the Capital One mobile app or website. You typically need to provide your total annual income and employment status. In some cases, you may have to provide how much you pay for your monthly rent or mortgage. Receive an automatic credit limit increase


Some credit card issuers automatically review your account and could increase your credit limit based on your activity. Our experience shows no negative impact on your credit score if you receive an automatic credit limit increase.

To help receive an automatic increase, you need a card from an issuer that performs automatic account reviews. You also need to use your card responsibly by regularly making purchases and paying off your credit card balance and bills on time. Note that your monthly payments should be the entire balance and not just the minimum payment if you want to avoid high interest rates. Open a new credit card


Another way to increase your overall credit limit is to apply for a new credit card. Note that becoming a new cardholder just about guarantees a hard credit check since you’ll be applying for a new line of credit. High-limit credit cards to consider

[myrdale]

Requesting an increase to the credit limit of an account will increase your overall credit score if don't utilize that additional credit.

Increasing your credit limit means you can purchase more expensive items on credit.

It also means you can fall deeper into debt if you're not careful.

[ua_guy]

There are two angles to this... Card companies increase credit limits to entice borrowers they know will use credit and also repay. They want to be the card of choice when you book that expensive vacation for the family, or decide to use a personal card to book business trips so you get the miles/perks. They also know they can increase limits for the credit-addicted and realize more interest, late fees, etc.

Consumers who manage credit well may want to increase credit limits so that their utilization looks better and gives them the best scores, which translates to the best rates and deals when they finance or use their credit elsewhere. Everyone else, they want limit increases because they've maxed out a card. Card companies are unfavorable to that, unless they are truly predatory--and some are.

Over the years, I've found that not worrying about it, and just paying my cards before interest accrues leads to automatically increasing limits, and excellent credit scores.