How much you can spend on your credit card is constrained by your credit limit. High limit credit cards allow you to spend much greater amounts than on a low limit card, plus you can often benefit from rewards and perks. However, the more you spend, the more danger there is that you could fall into debt, plus there will likely be a significant annual fee to pay. In this article we explain how high limit credit cards work, the advantages and potential pitfalls of applying for one, and whether it might suit you.
What is a high limit credit card?
A high credit limit card is one that allows you to spend much more than a standard credit card. Exactly how high a card’s credit limit needs to be to fall into this category is not easily defined, but more than £10,000 can be considered high by most metrics. The credit limit on a standard credit card is likely to be in the region of £3,000 to £4,000. If you have a low income or a poor credit history, you can expect to only be able to spend up to an amount between £250 and £1,200.
Your credit limit will be based on your income and your credit history. This is because the credit card company will only want you to spend up to what it thinks you can be relied upon to pay back. In other words, to get a high credit limit you will need a salary that means you can afford to pay that amount back each month and a credit history that shows you have reliably repaid debt in the past. Therefore, just because you apply for a credit card that advertises a premium service with a high credit limit, does not mean that you will get a high credit limit. You may get a lower limit than the one advertised, or you may be rejected altogether.
High limit credit cards often come with valuable rewards if the cardholder spends more than a certain amount each year, plus great perks and bonuses. These types of credit cards are less likely to include a 0% purchase period or 0% balance transfer option when compared to a standard credit card.
Do I need a high limit credit card?
A high limit credit card is likely to best suit people with high outgoings and a high income. This is because you will need a significant amount of money coming in to qualify for the card and you'll need to spend a significant amount to take advantage of its benefits. You will also need a good credit history that shows you are a creditworthy and reliable borrower.
If you can qualify for a high limit credit card, it is important to think about whether you will benefit from it. Will you spend enough to get the top tier rewards? Do you expect to make a big purchase that would require a very high credit limit? Is there a fee-free option that covers everything you need?
A high credit limit can create a temptation to overspend, potentially leading to missed payments, problem debt and difficulty when trying to borrow in the future. It is important not to let your credit limit influence your overall spending, as you will need to clear your credit balance eventually, possibly with interest. The best way to avoid interest payments is to clear your balance before any interest is charged. This usually means doing so within 56 days. If you are struggling to clear your credit card balance each month, it is unlikely that you would benefit from a higher credit limit.
Can I get a high limit credit card?
Here are the main factors that may affect your eligibility for a high limit credit card:
- Credit history - You are more likely to be accepted for a high limit credit card if you have a history of borrowing responsibility and within your means. Any missed repayments on your credit file will mean you are much less likely to get a high limit card.
- Existing credit - Your prospective credit card provider will be able to see how much available credit you have on other cards when it runs a credit check during the application process. If you already have a lot of available credit, for example because you have multiple credit cards, you are less likely to be accepted.
- Annual income - You will need to have enough money coming in to pay off the credit card, should you decide to spend up to the limit. The credit card provider will only let you spend what it judges you can afford to pay back. This means you may be approved for a lower credit limit than you had hoped for if you do not earn a high salary.
- Age - While many credit cards are available to UK residents over the age of 18, some high interest credit cards require applicants to be over 21.
- Relationship with card provider - In some cases, you may need to have an existing relationship with a credit card provider to access its high limit credit cards.
What credit score do I need to get a high limit credit card?
Your credit score is a numerical rating of how creditworthy you are, based on your credit history. Credit scores are calculated slightly differently by each of the major credit bureaus – Experian, Equifax and TransUnion – and there is no universal ‘good’ credit score. This means that there is no credit score that will guarantee you being approved for a high limit credit card, but your chances will improve significantly if your score is excellent. This is because it is a reflection of an unblemished credit history, which will be attractive to credit card providers.
You can check your credit score for free with each of the major credit bureaus. We explain how in our article 'The best way to check your credit score for free'.
How to find out if you can get a high limit credit card
We have teamed up with Creditec* to help you compare credit card deals and check your eligibility in minutes. You will be able to find out which credit cards you are most likely to be accepted for through a soft credit check, which will not affect your credit score. You can then tailor your personalised list to sort cards by the features that matter most to you. This could mean filtering for the type of credit card you want, sorting the list by the rate of interest or highlighting the cards you are most likely to be successful in applying for. You can click here to compare deals*.
How can I increase my credit limit?
There are a few different steps you can take to try and boost your spending power and get a higher limit on your credit card. For example:
- Ask your existing provider to increase your credit limit - Rather than apply for a new card, it can be a better option to stick with what you have and try to improve it. Your current provider will know how you use your card and how well you manage the debt, so may be more likely to approve a high credit limit than a different company would.
- Boost your income - Your credit limit can be heavily influenced by how much money you have coming in, as this is an indication of how much you can afford to pay back. Increasing your income is not easy, but it is a way to access a high credit limit.
- Reduce your credit utilisation - Credit card providers will be more willing to increase your credit limit if you are less likely to use the full amount. Keeping your credit utilisation low will show that you can responsibly manage your credit card and spend within your means.
- Increase your credit score - There are a number of ways to increase your credit score without making any drastic changes or having to transform your finances. We list the key options you should explore in our article ‘How to improve your credit score quickly’.
Pros and cons of a high limit credit card
Here are the key advantages and disadvantages of getting a high limit credit card:
Pros of a high limit credit card
- You can spend more money - You can make more purchases on your credit card before you need to clear your balance or use it for a big one-off spend.
- A useful emergency option - Having a high credit limit, even if you do not plan to use it, means you can put an unexpected expense on your credit card and pay for it at a later date.
- Perks and rewards - High credit limit credit cards often come with great rewards if you meet a minimum spend. This could be companion vouchers on flights, cashback, travel insurance or rewards points.
Cons of a high limit credit card
- High annual fee - You will likely need to pay a high annual fee to get the card, sometimes several hundred pounds each year.
- High interest rate - The purchase rate on the card will usually be higher than on the best low-interest credit card.
- High minimum spend - In order to get the rewards and perks of a high limit credit card, you will usually need to spend a significant amount of money on the card each year.
- High credit limit is not guaranteed - You are not guaranteed to actually get the high credit limit. You may be approved for the card, but with a lower credit limit than you had hoped for.
- Temptation to overspend - The more credit you have available to you, the greater the temptation to spend. This could lead to you overspending, paying hefty interest charges and potentially missing payments.
Alternatives to high limit credit cards
There are alternatives to spending on a high limit credit card. For example there are plenty of cards that offer great rewards and benefits without the added costs of huge annual fees or high credit limits. Read our ‘Compare the best cashback and reward credit cards’ article to see what options are available and check your eligibility.
If you want a high limit credit card to boost your spending power, you could consider a personal loan as an alternative. Loans do not come with the same rewards or the ability to pay off the debt at the end of the month without interest, but there are other advantages to consider. We cover the differences between a credit card and a loan in our article ‘Is it better to get a credit card or a personal loan?’.
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