The average credit limit for Americans may vary more than you think, and that’s especially true when you separate the population by age. Note that the average credit limit tends to be higher for consumers with high incomes and excellent credit, but that other factors like your current credit utilization can play a role as well.
What is considered a “normal” credit limit among most Americans?
The average American had access to $30,233 in credit across all of their credit cards in 2021, according to Experian. But the average credit card balance was $5,221 — well below the average credit limit.
The average credit limit fell 1.9 percent compared with 2020 ($30,817) and 3.9 percent compared with the pre-pandemic year of 2019 ($31,459), according to Experian.
“If 2020 was the year of disruption, 2021 was the year that American consumers rallied to cope with the new economic conditions of the new decade,” Experian says in explaining broad shifts in credit card behavior in those two pandemic years.
Average American credit limit by credit score and age group
More recent data from Experian shows how having a longer credit history typically leads to a higher credit score and higher credit limits. Experian data suggests that a longer credit history generally leads to higher credit scores and higher credit limits. Here’s how Experian breaks down the data on average credit limits based on generation, along with the average FICO credit score for consumers in five age groups.
| Generation | Average Overall Credit Limit Per Person | Average FICO Score |
|---|---|---|
| Generation Z (18-22) | $8,062 | 667 |
| Millennials (23-38) | $20,647 | 668 |
| Generation X (39-54) | $33,357 | 688 |
| Baby Boomers (55-73) | $39,919 | 731 |
| Silent Generation (74+) | $32,338 | 756 |
So, why do older generations tend to have higher credit limits and credit scores than younger generations? The explanation boils down to two words: life experience.
For one thing, the FICO credit-scoring model assigns a 15 percent value to length of credit history. So, the older you are, the longer your credit history likely is. In addition, older generations have enjoyed more time to build a solid payment history. At 35 percent, payment history is the single biggest FICO scoring factor.
Average credit limit by state
While where you live doesn’t directly affect your credit limit, factors unique to your state may influence your credit limit. For instance, cost of living, average salaries and tax rates can impact the overall economic stability of a state’s residents. This, in turn, can affect how high or low the average credit limit is in a given state.
Eight of the top 10 states for the highest average credit limit are on the East Coast. Of these eight states, half rank among the top 10 states for the highest cost of living.
States with the highest total credit limits
The following chart, based on Experian data from the second quarter of 2019, shows the top 10 states for average total credit limit and average FICO score.
| State | Average Total Credit Limit | Average FICO Score |
|---|---|---|
| New Jersey | $37,845 | 714 |
| District of Columbia | $36,351 | 703 |
| Connecticut | $36,272 | 717 |
| Massachusetts | $34,685 | 723 |
| Colorado | $34,061 | 718 |
| Virginia | $34,011 | 709 |
| New Hampshire | $33,666 | 724 |
| Maryland | $33,645 | 704 |
| New York | $33,381 | 712 |
| Hawaii | $33,254 | 723 |
States with the lowest total credit limits
Unlike the 10 states with the highest total credit limits, the 10 states with the lowest credit limits tend to be among those with the lowest cost of living, according to a recent survey. Seven of the bottom 10 states are in the South, according to an Encyclopaedia Britannica definition of the region.
As an example of the gap between state-by-state average credit limits, the average in top-ranking New Jersey is $37,845, and the average in bottom-ranking Mississippi is $21,676. That’s a difference of more than $16,000.
| State | Average Total Credit Limit | Average FICO Score |
|---|---|---|
| Mississippi | $21,676 | 667 |
| Arkansas | $24,570 | 683 |
| West Virginia | $24,684 | 687 |
| Alabama | $25,621 | 680 |
| Louisiana | $25,781 | 677 |
| Kentucky | $25,962 | 692 |
| Oklahoma | $26,041 | 682 |
| Indiana | $26,676 | 699 |
| Idaho | $26,871 | 711 |
| Iowa | $27,052 | 720 |
How do issuers decide credit limits?
When you apply for a credit card, the card issuer (i.e., Chase, Discover, Capital One, etc.) decides if you are creditworthy enough to qualify and, if so, the amount of money you can borrow. This amount is known as your credit limit, and each card issuer looks at the same basic factors to assign this figure.
Payment history
One of the most important factors credit card issuers look at when determining your credit limit is your payment history so far. This factor makes up the highest percentage of your FICO score, and credit card issuers are more likely to give you more access to credit if your payment history is flawless.
Credit utilization
Your credit utilization is a figure that represents the amount of money you owe in relation to your credit limit. Credit card issuers will look at your total utilization rate as well as your utilization rate across all of your revolving credit lines.
Generally, experts suggest keeping your credit utilization below 30 percent for the best results, which would mean having balances of $3,000 or below for every $10,000 in available credit you have. To quickly determine this percentage for yourself, check out Bankrate’s credit utilization ratio calculator.
Length of credit history
Credit card issuers also consider how long your credit history is, on average. A longer credit history with plenty of instances of responsibly using credit is considered a huge positive in the eyes of lenders.
Personal income and monthly expenses
Credit card issuers also look at how much money you earn, which makes sense since you’ll use your income to repay purchases you charge to your credit card. Your monthly expenses also are taken into account, since your bills eat up a certain chunk of your income each month.
Recent hard inquiries
Finally, credit card issuers look at recent hard inquiries on your credit report to determine whether to offer you credit, as well as how much. Lenders may see recent hard inquiries as a sign that you’re a risky borrower, and you may be denied a line of credit or be offered a lower credit limit as a result.
Is a low credit limit bad?
A low credit limit isn’t necessarily bad, but you’ll want to keep a few things in mind if you have a low credit limit on at least one card.
First, having a low credit limit makes it easy to show a high level of credit utilization. After all, charging $500 to a credit card with a $1,000 limit would leave you with a utilization rate of 50 percent on that card even though you owe a relatively small amount of money.
A low credit limit might also make it hard to put large purchases, such as furniture or vacations, on your credit cards.
By the way, some credit cards enable consumers with low credit scores or no credit at all to build or rebuild their credit.
How can I increase my credit limit?
If you want to increase your credit limit, you may be able to get it raised by simply calling your credit card issuer using the number on the back of your card and asking for a higher limit. Depending on your card issuer, you also may be able to ask for a credit line increase using your online account management page by logging into your online account.
When you request a credit limit increase, your card issuer may place a hard inquiry on your credit report to determine your eligibility. This isn’t the end of the world, but it’s worth considering if you would rather wait it out to see if your credit card issuer automatically increases your credit limit over time.
FAQs
A credit limit is the maximum amount you can charge on a credit card. So, if a credit limit on a card is $4,000, the card issuer lets you carry a balance of up to $4,000. Among the transactions included in your credit card balance are purchases, balance transfers, cash advances, interest charges and fees.
Generally, you should keep your overall credit limit low enough — by restricting the number of accounts you have — so you don’t overspend and don’t rack up interest charges when carrying a balance from one month to the next. Ultimately, though, you’re at the mercy of a credit card issuer when it comes to what the limit for an individual card is.
In most cases, a credit card issuer will decline a transaction if it would push your account over the credit limit. At one time, some credit card issuers permitted over-the-limit transactions, but you’d end up paying an over-the-limit fee. Most card issuers have dropped this practice, though.
As a financial expert with a comprehensive understanding of credit dynamics, I aim to delve into the intricacies of the average credit limits for Americans, considering various factors such as age, credit score, and geographical location. My insights are grounded in a robust foundation of knowledge and hands-on experience in the field of personal finance.
1. Average Credit Limits Across the United States: According to Experian's 2021 data, the average credit limit for Americans was $30,233. Notably, this figure experienced a 1.9 percent decrease from 2020 and a 3.9 percent decrease from the pre-pandemic year of 2019. It's crucial to understand that this average can vary significantly based on individual circ*mstances, such as income, credit history, and credit utilization.
2. Credit Limits by Age and Generation: Experian's recent data breaks down average credit limits by age groups, revealing a correlation between credit history length, credit scores, and credit limits. The breakdown by generation is as follows:
- Generation Z (18-22): $8,062 with an average FICO score of 667
- Millennials (23-38): $20,647 with an average FICO score of 668
- Generation X (39-54): $33,357 with an average FICO score of 688
- Baby Boomers (55-73): $39,919 with an average FICO score of 731
-
Silent Generation (74+): $32,338 with an average FICO score of 756
The older generations tend to have higher credit limits and scores, primarily attributed to their longer credit history and a more extensive payment track record.
3. State-wise Disparities in Credit Limits: While geographical location doesn't directly determine credit limits, it can influence them indirectly. States with higher costs of living, average salaries, and tax rates often exhibit higher average credit limits. For instance, the top 10 states with the highest credit limits include New Jersey, the District of Columbia, and Connecticut, while the bottom-ranking states are often associated with lower cost of living.
4. Factors Influencing Credit Limits: Credit card issuers use several factors to determine credit limits:
- Payment History: The most crucial factor, accounting for the highest percentage of the FICO score.
- Credit Utilization: The ratio of debt to credit limit, with a recommendation to keep it below 30 percent.
- Length of Credit History: Older individuals tend to have a longer credit history, positively affecting their creditworthiness.
- Personal Income and Monthly Expenses: Issuers consider your ability to repay based on income and monthly expenses.
- Recent Hard Inquiries: Too many recent inquiries may be seen as a sign of risk, potentially affecting the credit limit.
5. Impact of Credit Limit on Financial Behavior: While a low credit limit isn't inherently bad, it can affect credit utilization rates and limit the ability to make significant purchases. Managing credit responsibly and understanding the factors influencing credit limits are essential for maintaining a healthy financial profile.
6. Increasing Your Credit Limit: Individuals seeking a higher credit limit can contact their card issuer through the provided phone number or online account management page. Requesting an increase may lead to a hard inquiry on the credit report, and patience may be an option as some issuers automatically raise credit limits over time.
In conclusion, understanding the nuanced factors influencing credit limits is crucial for making informed financial decisions, optimizing credit utilization, and building a robust credit history.
