What is available credit, and how does it work?
Your available credit is the amount of money you can still spend on your credit card. Basically, it’s your credit limit minus your current balance. The amount of available credit you have can fluctuate based on factors like your purchases and card payments.
Understanding your available credit and how it works can help you avoid exceeding your credit limit—which can lead to fees or declined purchases, depending on the card issuer. It also plays a role in determining your credit scores and creditworthiness.
What you’ll learn:
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The available credit on a credit card is your credit limit minus your current balance.
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Having more available credit across all your revolving credit accounts can help you keep your credit utilization ratio low. And this could help improve your credit scores.
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Depending on your credit card issuer, going over your available credit could lead to extra fees, declined purchases or even a closed account.
- Capital One never charges cardholders for going over the limit on their credit cards. View important rates and disclosures.
How to calculate available credit
To calculate the available credit on your credit card, subtract your card’s current balance from its credit limit. Your available credit decreases as you make purchases with your card. If you pay off your entire balance, your available credit should equal your credit limit—the maximum amount you can spend on your credit card account.
After making a payment, the amount of credit available may not be immediately updated. This is because it can take one to five days for the payment to process, depending on the issuer. Knowing how much available credit you have on your card can help you avoid overspending, which could result in penalties and fees. It could also affect your credit.
If you have a Capital One credit card, you can check your current balance by signing in to your account online or through the Capital One Mobile app or by calling 800-CAPITAL (800-227-4825).
Available credit example
Suppose you have a credit card with a $10,000 credit limit. After paying for groceries, gas and other items, you’ve spent $1,500. That’s the card’s current balance, which means your available credit is $8,500.
If you’re carrying a balance of $500 from the previous month, that amount is also subtracted from your available credit. This would bring your available credit to $8,000.
What impacts your available credit?
Your available credit is based in part on your credit limit. And it can change based on factors such as:
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Purchases: As you use your card, the available credit you have decreases.
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Interest: Interest can be charged on purchases when you carry a balance. These charges are added to the account each month, decreasing your available credit.
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Pending charges: A pending charge—a transaction that hasn’t yet been processed and doesn’t affect your account balance—typically affects your available credit.
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Payments: Making payments on your account can increase your available credit.
- Fees: Fees can be added to your current balance, decreasing your available credit.
How to raise your credit limit
There are generally two ways to raise your credit limit. First, you can pay down your balance so you have more available credit. Paying your credit card statement early might be an option if it fits into your budget.
The other option, particularly if you’ve been using your card responsibly, is a credit limit increase. You could make the request yourself. In some cases, issuers will extend additional credit on their own. But keep in mind that in both cases issuers set their own policies to determine who’s eligible.
How does available credit affect your credit scores?
Available credit can play a role in determining your credit scores and creditworthiness in a few ways, including:
Credit utilization ratio
Your available credit may affect your credit scores because, as your current balance goes up, so does your credit utilization ratio. This ratio compares the credit you’re using across all your revolving credit accounts with the total credit you have available.
Credit-scoring companies like FICO® and VantageScore® consider your credit utilization ratio when calculating your credit scores. A low credit utilization ratio can show that you’re responsible with credit and spending, and it can help your credit scores. On the other hand, a high credit utilization ratio can negatively affect your scores.
Debt-to-income (DTI) ratio
Creditors could also look at your DTI ratio, which is calculated by comparing how much debt you currently have each month with your monthly income. Carrying a balance on your credit card can negatively affect your DTI ratio, which can impact your ability to secure new lines of credit.
Creditworthiness
Creditors might look at certain factors related to your available credit when making lending decisions. For example, lenders could consider information from your credit reports, such as:
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How often you exceed your credit limit
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How often you make payments that are over the minimum amount due
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Changes in your credit card’s balance
What happens if you go over your available credit?
If you go over your credit limit and have no available credit, it could have a negative impact on your credit scores. And depending how much and how often it happens, your credit card issuer might:
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Charge fees
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Decline purchases
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Increase interest rates
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Decrease the credit limit
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Close the account
Available credit for Capital One cardholders
If you’re a Capital One cardholder, you’ll never be charged fees for exceeding your credit limit. View important rates and disclosures.
And eligible cardholders may be able to exceed their credit limits. If your account has access, you can see whether a purchase will be approved if it puts you beyond your credit limit. You could also disable the ability to spend more than your credit limit.
Available credit FAQ
If you’re still curious about available credit, the answers to these questions might help.
What is a good available credit amount?
The Consumer Financial Protection Bureau (CFPB) suggests keeping your credit utilization ratio below 30%. So if you have a $10,000 credit card limit, your balance should stay below $3,000. That would leave $7,000 in available credit.
Current balance vs. available credit: How do they compare?
The current balance is the most up-to-date amount owed on the card. Every time you swipe your credit card, the purchase is added to the current balance. As your current balance grows, your available credit shrinks.
The current balance is different from the statement balance, which is the total amount owed at the end of the card’s billing cycle.
Can I use all my available credit?
Yes. But using all your available credit can negatively impact your credit scores. That’s why the CFPB recommends using less than 30% of your credit limit.
Why is my available credit less than my credit limit?
You can think of your card’s available credit as your credit limit minus your current balance. If you have outstanding charges, they’ll reduce your available credit. Suppose you have a $10,000 credit limit. If you spend $1,000, your available credit will drop to $9,000.
Your available credit might be the same as your credit limit at the beginning of the billing cycle if you don’t carry a balance.
Key takeaways: What does available credit mean?
A credit card’s available credit is generally how much the cardholder has left to spend. You can calculate your available credit by subtracting your current balance from your credit limit.
Looking to increase your overall available credit? You can start by seeing whether you’re pre-approved for a Capital One credit card. Checking is easy, and it won’t hurt your credit scores.
