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The Average Credit Card Limit Is Dropping: What It Means for You

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One of the best ways to improve your credit score is keep your debt levels as low as possible, and your efforts will be greatly helped by having high credit card credit limits, while keeping your balances extremely low. The higher your limit, the easier it is to do that.

The trick is you have to get an issuer to give you a high credit limit, and at the start of this year, new credit cards came with lower credit limits than they did at the same time last year, according to data from credit bureau Experian. Average credit limits on new cards were down for all consumers, even those with the best credit, but cardholders with bad credit saw the greatest decline in credit limits.

In the first quarter, banks opened $77 billion in new credit card accounts, up from $71 billion in the first quarter of 2014, but the average credit limit was down about 11% from last year. Experian broke down the average credit limits on new credit accounts by VantageScore 3.0 risk tier.

Super Prime (781-850)

Average credit limit per new account Q1 2015: $9,543
Average credit limit per new account Q1 2014: $9,604
Change: down 0.6%

Prime (661-780)

Average credit limit per new account Q1 2015: $5,209
Average credit limit per new account Q1 2014: $5,382
Change: down 3.2%

Near Prime (601-660)

Average credit limit per new account Q1 2015: $2,277
Average credit limit per new account Q1 2014: $2,497
Change: down 8.8%

Subprime (500-600)

Average credit limit per new account Q1 2015: $966
Average credit limit per new account Q1 2014: $1,171
Change: down 17.5%

Deep Subprime (300-499)

Average credit limit per new account Q1 2015: $509
Average credit limit per new account Q1 2014: $686
Change: down 25.9%

Paying your credit card balance in full each billing cycle helps keep your credit utilization rate low — it won’t perpetually creep up until it has become out-of-control debt — but having the ability to pay your bill in full isn’t necessarily the way to decide how much you should charge. From a credit score perspective, it’s more important you use as little of your available credit as possible. Many experts recommend keeping your credit card balances at less than 30% of your overall available credit, though those with the best credit scores keep their utilization to less than 10%. You can see exactly what your credit utilization is by getting two of your credit scores for free every 30 days on Credit.com.

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  • Michael

    Silly people why bother? If you are being given Credit and you get a lower Score for using over 30% Why bother?

  • HandymanRon

    Here they say to keep your credit card debt lower than 30%, 10% if possible, of available credit. Yet on the other hand, I’m told that if you are contemplating the purchase of a new house, you don’t want a lot of available credit because they’re afraid you’ll charge up to your max if you get into financial trouble. I called all my card issuers about 6 months ago and got my limits lowered to between $500-1000 per card, down from $10,000 per card. Most customer service reps had never had a customer call to have their available credit limit reduced and had to call for a supervisor.

    • GuessWho

      That was not a very wise move.

      Now whenever you use your credit cards and don’t pay them off in full before the statement close date, then they’ll report a balance on your credit report. With such low limits, even $1500 reported (for example, just that month’s expenses that you intend on paying in full on the due date) could still spike your utilization % and tank your scores.

      Say you have 5 cards with $750/ea avg CL, then $1500 reported means you are now at 40% utilization and your score will probably drop 50 points.

      If you ever need credit in the future you’ll be fighting to get those credit limits back up. Many of the banks will want to pull a new hard inquiry to see if you qualify for a credit limit increase. Each of those new inquiries will further drop your score another 5-10 points.

      Ron, whoever told you that incorrect info really did some damage to your credit profile. Very unfortunate that you took their advice.

      • HandymanRon

        It was a good idea, after all. Our real estate agent commended us for doing so, saying it would look good to potential lenders. We got the absolute lowest mortgage rate on our new home purchase. I didn’t mention in the first post that we used only about 1% prior to the reduction in credit limits & paid in full every month. Our credit scores were 837 for my wife & 832 for me. I’m the one who has always worked, so go figure.

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