Guide to credit limits
What does a credit limit mean?
A credit limit is the maximum amount of money you can borrow on your credit card. This amount depends on your specific account and unique credit score.
For example, say your credit card has a limit of £1,000. This means you can borrow a maximum of this amount on credit at this time. As you use your credit card for payments, your remaining balance goes down. So, spending £400 on car repairs would leave you with £600 of available credit. If you pay off the balance by £200, your credit will go up to £800. But your limit will still be £1,000.
Remember, your credit limit is a maximum, not a target. Any transaction made over and above your credit limit may be declined, and you may have to pay some fees.
How do I check my credit limit?
When you open a credit card account, you’ll be informed of your credit limit. If you’re unsure of what your credit limit is, you can always check by looking at your most recent credit card statement or by simply signing in to your internet banking.
Should I increase my limit if offered?
If you want more flexibility with your finances, you can request a higher credit limit from your card provider. A higher credit limit can be beneficial in the event of an emergency, for example, or if you see yourself making bigger one-off purchases in the future. Having a high limit also means you can spend more and accrue more points and cashback rewards.
However, a higher credit limit also opens the door to potential debt. For those who are tempted to spend beyond their means, it’s important to factor in this risk, and acknowledge that you could be hit with higher interest payments if you don’t pay off the full balance every month. Another downside of having a high credit limit is it might put off other parties from lending you money in the future.
How do I increase my credit limit?
To request a credit limit increase, call the number on the back of your credit card or contact the issuer via your online account. Alternatively, you could research other credit card rates that may provide a more favourable rate.
If you’re an M&S Bank Credit Card customer, you can request a credit limit increase or decrease using Internet Banking. You can also find out more about how to view your credit limit and what to do if you’ve nearly reached your credit limit.
Some may not qualify for a credit limit increase, however decreases will always be applied if requested.
Published December 2022