While a higher income generally means a higher credit limit, income is just one factor lenders consider when setting credit limits. Other credit limit influences include creditworthiness, credit utilization ratio, credit card attributes and economic trends that affect credit risk.
When deciding how large to make your credit limitâthe maximum balance you can have on a credit cardâcard issuers consider your income along with several other factors, such as your credit scores, outstanding debts and how much of your available credit is in use. Heres what you need to know about how lenders determine credit limits.
Having a high credit limit can seem glamorous. But is a $20,000 limit really considered high? And how can you get approved for a higher limit if you want one? This comprehensive guide will explain everything you need to know about high credit card limits.
What Counts as a High Credit Limit?
Most credit cards have limits between $500 and $15,000 So generally, anything above $15k starts entering high limit territory According to credit experts, here’s how different credit limits stack up
- $5,000+: Above average
- $10,000+: High
- $15,000+: Very high
- $20,000+: Extremely high
So yes $20,000 is considered an exceptionally high credit card limit. You’ll need a top-notch credit score and income to get approved for that much spending power.
Below are examples of popular cards that offer high limits for qualified applicants:
- Chase Sapphire Reserve® – Up to $20,000+
- Citi Prestige® Card – Up to $20,000+
- Capital One Venture Rewards Credit Card – Up to $20,000+
- TD First Class Visa Signature® Credit Card – Up to $25,000+
But remember, these numbers are for the maximum limits offered to only the most creditworthy applicants. Many cardholders will get approved for much lower limits.
What Are the Benefits of a High Credit Limit?
Having a higher credit limit comes with several potential advantages:
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Lower credit utilization – With a high limit, you can spend more before maxing out your card. This keeps your utilization low, which is good for your credit scores.
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Higher credit score – In general, higher limits are correlated with higher credit scores. This can help you qualify for the best loan rates.
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Make big purchases – A high limit gives you flexibility to make large purchases without bumping up against your ceiling.
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Earn more rewards – Some rewards cards offer enhanced earnings once you spend over a certain amount. A higher limit lets you maximize these bonuses.
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Emergency fund access – Your credit limit can function as backup funds in a financial pinch. But only use this as a true last resort!
How Do Credit Card Companies Determine Your Limit?
When you apply for a new card, the issuer will conduct a thorough review of your credit profile to set your limit. Here are the main factors that determine how much you can spend:
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Credit score – This gives issuers a snapshot of your overall creditworthiness. Excellent credit scores (720+) lead to higher limits.
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Income – Most applications ask for your annual individual and household income. A high income signals you can manage more credit.
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Existing debt – Lenders look at your debt-to-income ratio. The less debt you have, the higher your limit may be.
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Credit history – Applicants with longer, well-established credit histories tend to get higher limits.
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Credit usage – Issuers analyze how much of your available credit you currently use. Lower utilization helps your case for a higher limit.
The card issuer weighs all these aspects of your financial profile to determine the level of risk in extending you more credit. Low-risk applicants get approved for higher limits.
What Credit Score Do You Need for a $20,000 Limit?
There’s no single credit score threshold for a $20,000 credit limit. But in most cases, you’ll need a score in the good to excellent range:
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Good credit – Credit scores of 670 to 739 may qualify for limits around $10,000.
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Excellent credit – With scores of 740 to 799, you have better odds of getting approved for $15,000 to $20,000 limits.
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Exceptional credit – Near-perfect scores of 800+ give you the best shot at ultra-high limits of $20,000+.
Keep in mind credit scores alone don’t guarantee any limit. Issuers still consider factors like income, existing obligations, and past use of credit. But excellent credit is a prerequisite for five-figure spending power.
How to Get Approved for a High Limit
If your goal is getting a higher credit limit, here are some tips to boost your odds of success:
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Improve your credit – Increase your scores by always paying bills on time, keeping balances low, and limiting hard inquiries on your credit reports.
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Lower your debt – Pay down balances on all revolving credit accounts. The less you owe overall, the better.
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Increase income – If possible, take steps to grow your individual and household income. Higher earnings help justify larger limits.
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Request limit increases – Ask issuers to raise your limit on existing accounts after 6+ months of on-time payments.
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Apply for the right card – Seek out cards known for granting high limits to qualified applicants.
With excellent credit management habits and a strong financial profile, you’ll be in a great position to get approved for higher credit limits.
Can You Get Credit Limits Above $20,000?
Absolutely! While $20,000 is considered extremely high, it’s certainly not the upper limit. There are a select few people who get approved for credit limits over $100,000.
But that is very rare and requires ideal credit and income. More commonly, responsible high earners can get limits in the range of $30,000 to $50,000.
The Chase Sapphire Reserve and American Express Centurion (aka “Black Card”) are two cards that may offer limits this high for top-tier applicants.
Potential Downsides of a High Limit
While high limits come with benefits, they could also lead to problems if you’re not careful:
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Overspending – Having larger available credit could tempt you to spend more than you can afford.
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Higher minimum payments – Bigger balances incur higher monthly minimums you’ll need to pay.
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Big interest charges – Racking up large balances results in hefty interest costs as balances carry over month to month.
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Lower credit score – High utilization from big spending can quickly tank your credit scores.
The key is using your higher limit responsibly. Have a plan for how you’ll use the additional credit and be sure to pay balances in full each month.
Tips for Using a High Limit Responsibly
Here are some tips to leverage a high credit limit wisely:
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Set a budget for credit card spending each month and stick to it diligently.
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Pay your full statement balances on time every month without fail.
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Split large purchases across multiple billing cycles to avoid spikes in utilization.
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Keep an emergency fund so you won’t need to rely on credit for unexpected expenses.
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Monitor your credit frequently to catch any signs of overuse.
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Ask the issuer to lower your limit if you don’t think you can handle the temptation.
The Bottom Line
A credit limit of $20,000 or more lets you spend at an elevated level – but it’s definitely not commonplace. To qualify for credit limits that high, you’ll need top-notch credit, robust income, and low debt levels.
If you get approved for a lofty limit, use it wisely to enjoy the advantages while avoiding the potential pitfalls. Your high limit is a major vote of confidence in your financial responsibility.
Do Lenders Look at Income to Determine Your Credit Limit?
Yes, lenders typically ask you to state your income when applying for a credit card, and they may ask for verification in the form of a pay stub or income tax return. While this information is used in calculating your credit limit, it is not the only factor.
How Does Your Credit Limit Impact Your Credit Score?
Over the long term, increasing your total credit limit by opening new credit accounts and/or expanding the borrowing limits on existing ones gives you flexibility and, as long as you pay your bills on time each month, shows lenders that you can handle multiple accounts and greater capacity for debt. Managing a mix of accounts and making consistent on-time payments can promote steady credit score increases.
Changes in credit limit also can cause more sudden, significant changes in your credit scores by altering the credit utilization ratio represented by outstanding balances on your revolving accounts. Raising your total credit limit, by opening a new account or getting a credit limit increase on an existing one, “dilutes” your overall utilization.
For instance, if you have two credit cards, one with a $4,000 credit limit and an $800 balance, and another with a $2,000 credit limit and a $400 balance, your total credit utilization ratio is:
- ($800 + $400) / ($4,000 + $2,000) = ($1,200 / $6,000) = 20%
To understand the dilution effect, lets say you open a new credit card account and get a spending limit of $6,000. If you havent made any charges on the new card (so its balance is zero), your credit utilization ratio becomes:
- ($800 + $400 + $0) / ($4,000 + $2,000 + $6,000) = ($1,200 / $12,000) = 10%
Conversely, if you or a lender closes a revolving account, or if the lender lowers the credit limit on an existing one, the reduction in your overall credit limit “concentrates” the utilization ratio represented by your outstanding balances. To understand this effect, lets revisit our original two-card example. If the lender lowers the credit limit on one card from $4,000 to $2,000, your utilization ratio becomes:
- ($800 + $400) / ($2,000 + $2,000) = ($1,200 / $4,000) = 30%
These changes can influence your credit scores, but typically only if they raise your utilization ratio to about 30% or greater (as in the last example), or they lower a utilization ratio that exceeds that amount.
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FAQ
Is $20,000 a high credit card limit?
Yes, a $20,000 credit limit is good, as it is above the national average.
Is $20,000 in credit card debt a lot?
If you’re carrying a significant balance, like $20,000 in credit card debt, a rate like that could have even more of a detrimental impact on your finances. The longer the balance goes unpaid, the more the interest charges compound, turning what could have been a manageable debt into a hefty financial burden.
What is considered a high credit limit?
What credit card has a 20 000 limit?