So you’ve heard of a credit card—but have you heard of a credit limit? It’s a big deal when it comes to how much you’re allowed to spend, and it’s one of the first things banks consider when giving someone a card. Whether you're close to getting your first card or just curious about how it all works, understanding credit limits now will help you make smarter choices later.

In this post, we’re breaking down what a credit limit actually is, why it matters, and how banks decide how much spending power to give you.

What Is A Credit Limit

A credit limit is the maximum amount of money a credit card company will let you borrow on your card.

Think of it like this: You get a spending cap—and once you hit it, you can’t borrow more until you pay some of it back.

So if your credit limit is £1,000, and you’ve spent £600, you’ve got £400 of available credit left.

Important: Go over your credit limit, and you could face extra fees or a lower credit score.

Why It Matters

Your credit limit isn’t just a number—it affects:

How much you can spend
How easy it is to manage your balance
Your credit score (yep, it impacts that too)
How much interest you could end up paying

The higher your limit, the more freedom you have—but also, the more temptation to overspend. That’s why banks don’t just hand out high limits to everyone.

So, How Do Banks Decide Your Credit Limit

Here’s what they look at:

1. Your Credit Score

This is a number that shows how responsible you are with money. If you’ve borrowed before and always paid on time, your score will be higher—which usually means a higher limit.

If you're new to credit (like most teens), you may start with a lower limit until you build trust.

2. Your Income

Banks want to know how much money you’re earning. The more you make, the more you can afford to pay back—so they’ll often give you a higher limit.

No income? No problem. Many teens start with student or secured cards that have smaller limits, which is totally normal.

3. Your Existing Debts

Already owe money somewhere else? That could mean a lower limit, since the bank doesn’t want to overload you.

4. Your Payment History

Do you pay bills on time? Even things like a mobile phone contract or buy-now-pay-later services can affect how banks see you. A history of late or missed payments = less trust = lower limit.

5. The Type of Card You’re Applying For

Different credit cards come with different limits. A student card might start you off with £200–£500, while a premium rewards card could offer £2,000 or more—but only to people with great credit.

Can Your Credit Limit Change

Yes! And here’s how:

It can go up if you use your card responsibly, pay on time, and build credit.
It can go down if you miss payments or the bank feels you’re at risk of overspending.
Some banks will even let you ask for a higher limit—but be careful not to increase it unless you really need it.

What Happens If You Go Over Your Limit

Bad news: Going over your credit limit can lead to fees, rejected transactions, or even damage to your credit score.

To avoid that:

Check your balance regularly
Set up alerts
Only spend what you know you can repay

Tips To Manage Your Credit Limit

Treat it like a tool, not free money
Keep your spending well below your limit (aim for under 30%)
Use apps or texts to track your spending
Always try to pay off your balance in full
Start small and build up responsibly

Final Thought

Your credit limit isn’t just about how much you can spend—it’s about how much banks trust you to manage. The good news? You don’t have to wait until adulthood to build that trust. By learning the basics now and making smart choices with money, you’re already ahead of the game.

Credit cards may come later, but smart money habits start today.

Spend smart. Stay in control. And remember—it’s your limit, not your goal.