Key takeaways
- As long as you don’t use your available credit to run up high balances, a lot of available credit won’t hurt your credit score.
- Available credit can even improve your credit utilization, which accounts for 30 percent of your credit score.
- Some issuers may cap the amount of credit they’ll extend a cardholder across multiple cards, meaning you could run into an obstacle getting another card from the same issuer if you already have a lot of available credit with them. There are solutions you can explore if this happens to you.
Having a bunch of available credit you have no intention of using could work against you if you apply for another credit card, but that’s really the only negative consequence to worry about. As long as you aren’t tempted to max out your available credit limits, extra available credit is nothing to worry about.
In fact, having more credit than you need can even help you when it comes to one of the most important categories contributing to your credit score: Your credit utilization. This factor makes up 30 percent of your FICO credit score, which means the more available credit you have, the easier it is to score highly in this category.
Is it bad to have a high credit limit?
It definitely isn’t “bad” to have a high credit limit. Actually, this shows that you’ve been rewarded for having a high income, maintaining an excellent credit score or both. Generally speaking, a high credit limit tells future creditors that you can handle borrowing money and paying it back on time.
A high credit limit doesn’t mean you have to use it, and you aren’t penalized if your spending never gets close to your limit. A high credit limit gives you a lot of room to spend and maintain a low credit utilization ratio.
Most experts agree keeping your credit utilization below 30 percent of your available credit limits is a good idea, and keeping credit utilization below 10 percent can help your credit score the most. This means keeping your credit card balances below $3,000 for every $10,000 in available credit you have at a maximum, or below $1,000 for every $10,000 in available credit for the best possible results.
If you have a credit limit of $20,000 on a single credit card, this means you could owe $2,000 on that card and still score exceptionally well for your credit utilization ratio. Ultimately, high credit limits give you more wiggle room to carry a balance without appearing credit hungry to the credit bureaus or hurting your credit score.
What is your credit utilization?
You can use Bankrate’s credit utilization calculator to see your total credit used expressed as a percentage.
Can you get denied for having too much available credit?
Yes, it’s possible to be denied a new credit card based on having too much available credit. Card issuers may decide you have the income and credit to support a specific amount of available credit overall, which means a denial could take place if you’ve already achieved that limit across other cards with the issuer.
If you’re applying for another card with an issuer that has already given you a generous amount in available credit, there’s a potential workaround you can try. If you don’t get an instant approval when you apply for a new card with that issuer, call the issuer’s credit card reconsideration line to see if they’ll let you move some available credit from an existing card to the new account.
If you have a $30,000 credit limit on one card in good standing, for example, they may let you lower that limit to $20,000 and move $10,000 of your credit limit over to the new card you’re applying for. At the very least, you should call and ask about this possibility if you have other accounts in good standing with the issuer. They may say “no” to your request, but you’ll never know unless you ask.
What is the ideal amount of available credit?
The ideal amount of available credit is any amount over 90 percent of your credit limits. For best results, you should strive to maintain $9,000 in available credit or more for every $10,000 in credit limits you have.
You may also want to make sure you have enough available credit to get you through an emergency, particularly if you’re building or rebuilding an emergency fund. For example, it makes sense to have enough available credit to cover a surprise car repair so you can get your car back on the road to go to work, or enough available credit to cover a few months of living expenses if you face a loss of income or lose your job.
Most experts suggest three to six months of emergency expenses kept in savings, just in case. The best high-yield savings accounts offer high APYs that can help you build an emergency fund as quickly as possible.
As of June 2024, 29 percent of people said they had some savings but not enough to cover three months’ expenses, according to Bankrate’s Emergency Savings report. A credit card with plenty of available credit can serve as a backup in a true emergency. Cards can also be a convenient way to pay for emergency expenses upfront before reimbursing yourself from your emergency fund. It’s even better if you can pay with a cash back or travel rewards card so you can rack up rewards for that emergency payment you’re able to pay off right away.
Average credit limit statistics
The average credit limit for Americans varied dramatically by age and generation in 2024, according to information from credit reporting agency Experian. Average credit limits also increased across the board for every generation from 2023 to 2024, with baby boomers having the highest average credit limits overall.
| Generations | Average credit limits 2023 | Average credit limits 2024 |
| Source: Experian State of Credit Cards | ||
| Generation Z (ages 18 to 27) | $12,899 | $14,195 |
| Millennials (ages 28 to 42) | $27,533 | $29,665 |
| Generation X (ages 44 to 59) | $38,665 | $40,551 |
| Baby boomers (ages 60 to 78) | $41,906 | $42,824 |
| Silent generation (ages 79+) | $32,812 | $32,889 |
Average balance statistics
Experian data further revealed that the average credit card balance across Americans of all age groups came in at $6,730 as of Q3 of 2024. This average is 3.5 percent higher than the average credit card balance the year before.
Average credit card balances also varied by generation in 2024, but increased for all generations compared to the previous year.
| Generations | Average credit card balance 2023 | Average credit card balance 2024 |
| Source: Experian State of Credit Cards | ||
| Generation Z (ages 18 to 27) | $3,262 | $3,456 |
| Millennials (ages 28 to 43) | $6,521 | $6,932 |
| Generation X (ages 44 to 59) | $9,123 | $9,557 |
| Baby boomers (ages 60 to 78) | $6,642 | $6,754 |
| Silent generation (ages 79+) | $3,412 | $3,428 |
Average credit utilization
Average credit utilization varied by generation as well, and the results are not that surprising. Data from Experian shows that older consumers tend to use less of their available credit overall, whereas younger credit card users tend to carry higher credit card balances.
The following chart lays out the average credit utilization by generation for Q3 of 2024, per credit reporting agency Experian.
| Generations | Average credit utilization | Average credit score |
| Source: Experian State of Credit Cards | ||
| Generation Z (18 – 27) | 37% | 681 |
| Millennials (28 – 43) | 36% | 691 |
| Generation X (44 – 59) | 34% | 709 |
| Baby boomers (60 – 78) | 21% | 746 |
| Silent generation (79+) | 12% | 760 |
Average credit utilization also varied dramatically within each tier of credit scores in 2024. Data from Experian shows that average credit utilization is much higher for those with poor credit, whereas consumers with better credit tend to use less of their available credit overall.
The following chart lays out the average credit utilization by credit score range in the third quarter of 2024, per credit reporting agency Experian.
| FICO score range | Average credit utilization 2024 |
| Source: Experian State of Credit Cards | |
| 300-579 (Poor) | 80.7% |
| 580-669 (Fair) | 61.4% |
| 670-739 (Good) | 38.6% |
| 740-799 (Very good) | 15.2% |
| 800-850 (Exceptional) | 7.1% |
The bottom line
Having too much available credit isn’t something to worry about, yet there are other credit factors that should have your attention. For the best chance at the highest possible credit score, make sure to prioritize paying your bills early or on time while striving to keep your credit utilization as low as possible. The second part of the equation actually becomes easier when you have high credit limits, so no need to let the issue of plenty of available credit keep you up at night.
Read the full article here
