Finance glossary
Credit Limit
In simple terms
A credit limit is the most you are allowed to borrow on a credit card or similar account at any one time. Spend up to it and you cannot borrow more until you repay some of the balance.
On this page
What does credit limit mean?
A credit limit is the ceiling a lender sets on how much you can owe on a revolving account such as a credit card, store card or some overdrafts. It is based on your credit history, income and the lender’s assessment of what you can afford.
You can spend up to the limit; once you reach it you cannot borrow more until you repay part of what you owe. Going over it can trigger a fee and a declined transaction.
How a credit limit works
When you open an account the lender sets an initial limit. Over time it may offer to increase it if you manage the account well — though it must not offer increases to customers showing signs of financial difficulty, and you can decline or opt out of automatic rises.
How much of your limit you use — your credit utilisation — feeds into your credit score. Using a large share of your limit can look like reliance on credit, even if you always pay on time.
How could this affect me?
A higher limit gives more flexibility and can lower your utilisation ratio, but it also makes it easier to build up debt you struggle to repay. A limit that suits your spending and that you can clear each month is usually healthiest.
If a limit feels too tempting or too high, you can ask the lender to reduce it. You can also opt out of unsolicited increases so your limit only rises when you choose.
Things to watch out for
- Going over your limit can mean a fee and a declined payment.
- A higher limit is not free money — it is more debt you could build up.
- Using most of your limit raises your utilisation and can dent your credit score.
- You can opt out of automatic limit increases if you would rather stay in control.
Know your rights
- Under FCA rules, lenders must not offer credit-limit increases to customers who show signs of financial difficulty.
- You have the right to opt out of unsolicited credit-limit increases, and to ask for your limit to be reduced.
- If you are treated unfairly, you can complain and escalate to the Financial Ombudsman Service.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- FCA, Credit card market study — persistent debt and credit-limit rules (opens in a new tab). Accessed 22 Aug 2026.
- MoneyHelper, How credit cards work (opens in a new tab). Accessed 22 Aug 2026.