Available Credit on a Credit Card: What It Is & Why It’s Important

By Brian O'Connell · January 20, 2023 · 6 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Available Credit on a Credit Card: What It Is & Why It’s Important

Put simply, available credit on a credit card is how much money a cardholder has left to spend in a billing cycle. Being aware of your available credit is key to ensuring you don’t spend beyond your credit limit. Doing so can lead to having a purchase declined or facing penalties, such as a higher interest rate.

Once you know what available credit means, however, you may find that you have further questions. How much available credit should you have? How can you check your available credit? And are there any ways to increase your available credit?

What Is Available Credit on a Credit Card?

Available credit is the amount of money that’s left on a cardholder’s account in the current billing cycle. As a cardholder uses their credit card, the purchase amounts are deducted from their credit limit, which is the maximum amount a cardholder can spend on the card. The remaining amount is what’s known as available credit.

Credit card companies recalculate your available credit every time you make a purchase and when you make a card payment. When you buy something with your credit card, your available payment falls, whereas your available credit rises when you make a payment. One of the key differences between available credit and credit limit is that your credit limit will remain the same, regardless of your spending or payments.

Cash in on up to $250–and 3% cash back for 365 days.¹

Apply and get approved for the SoFi Credit Card. Then open a bank account with qualifying direct deposits. Some things are just better together.


The Importance of Having Available Credit

Knowing your available credit can have a significant impact on your credit card experience. The more available credit you have, the more you can spend on your card. If your available credit is low, you’ll know that you’re nearing your credit limit.

When you aren’t aware of whether you have available credit, the following scenarios can become a reality depending on how your credit card works:

•   You could have a purchase declined if you don’t have the available credit to cover it.

•   You could incur an interest rate penalty, meaning your rate will go up.

•   You could owe an over-limit fee.

•   Your credit card issuer could lower your credit limit, or even close your account after multiple overages.

How to Check Your Available Credit

Cardholders can easily check their available credit in the following ways:

•   On their monthly credit card statement

•   Via the credit card company’s app or website, listed under “accounts”

•   By calling their credit card issuer through the number on the back of their card

Calculating available credit is also fairly straightforward. All a cardholder has to do is subtract their current credit card balance from the account’s total credit limit. In other words, the formula is: credit limit – current balance = available credit.

Make sure to factor in all card-related costs when making this calculation, account fees and interest charges, which will apply if you’re carrying a balance on a credit card.

Recommended: What is a Charge Card?

How Much Available Credit Does It Make Sense to Use?

It’s recommended that credit card users regularly check their credit card balance and refrain from overspending in order to maintain a lower credit utilization rate. This rate reflects how much of their overall credit limit they’re using at a given time.

Credit utilization is not only important for household budget considerations — it also impacts credit score. The lower the credit card utilization rate, the better for a cardholder’s credit score. Aim to maintain a credit-to-debt ratio of no more than 30%, meaning the cardholder has 70% of their available credit remaining on the card account.

Tips for Increasing Your Available Credit

Cardholders looking to boost their available credit can leverage several action steps to get the job done.

Pay Down Your Card Balances

Perhaps the most efficient way to boost your available credit — short of not using the card at all — is to make regular payments. This will keep your credit card debt as low as possible.

For maximum results, pay as much as your household budget allows each month toward your credit card balance rather than only making the minimum payment. Done regularly, this will help to keep your credit card debt down and your available credit up.

Recommended: When Are Credit Card Payments Due?

Request a Credit Limit Increase

Technically, asking for — and getting — a credit limit increase from your credit card company will also boost your available credit. You’ll need good credit and a solid credit card payment history to gain approval from your credit card company though. Also note that the request for a credit limit hike will also lead to a hard credit check, which could negatively impact your credit score.

Once you get approved for a credit limit boost, resist the temptation to overspend now that you have a higher credit limit. To be safe, don’t ask for a credit limit boost unless you’re able to pay off your current balance. That’s a good sign you can handle any potential added credit card debt.

Recommended: What Is the Average Credit Card Limit?

Get a New Credit Card

As long as you’ve done a good job of making timely debt payments and have maintained a stellar credit score, you stand a chance of getting approved for a new credit card with a higher credit limit.

If your new credit card doesn’t offer a higher credit limit, you’ll still benefit from the available credit earned from the new card.

Recommended: How to Avoid Interest On a Credit Card

The Takeaway

Knowing how much available credit you have on a credit card clues you in to how much you still have available to spend. However, you’ll want to avoid using the entirety of your credit limit — meaning whittling your available credit down to $0 — due to the consequences that can have. Not only could that result in a declined credit card or a hiked interest rate, a high credit utilization rate can have implications for your credit score.

If you’re looking for a way to increase your available credit, one option is to get a new credit card. The SoFi credit card allows you to earn competitive cash-back rewards points from your spending with the card. You can then use those rewards to help you save, invest, and pay down SoFi debt. Learn more and apply for a credit card with SoFi today.

The SoFi Credit Card is more than a way to pay for things. It’s designed to help you reach your financial goals.

FAQ

How much available credit should I have?

A good rule of thumb is to have at least 70% of your credit limit available. That will allow you to maintain a credit utilization rate of 30%, which can help you to avoid negative impacts to your credit score.

What does available credit mean on a credit report?

Available credit on a credit report means the amount of credit available to a consumer relative to their outstanding debt. Lenders and creditors want to see consumers with high available credit and low debt balances, as this shows responsible borrowing habits.

Is available credit the amount I can spend?

Yes, available credit is the amount of credit available to a cardholder that they can use.

Why is my available credit low?

Low available credit means you’ve used a large portion of your credit limit. You might aim to spend less in the future to maintain a lower credit utilization rate. In the meantime, keep a close eye on your spending to avoid hitting your credit limit, which can have negative consequences.


Photo credit: iStock/Ridofranz

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back rewards when redeemed for a statement credit.1
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
1See Rewards Details at SoFi.com/card/rewards.
Members earn 2 rewards points for every dollar spent on eligible purchases. If you elect to redeem points for cash deposited into your SoFi Checking or Savings account, SoFi Money® account or fractional shares in your SoFi Active Invest account, or as a payment to your SoFi Personal, Private Student, or Student Loan Refinance, your points will redeem at a rate of 1 cent per every point. If you elect to redeem points as a statement credit to your SoFi Credit Card account, your points will redeem at a rate of 0.5 cents per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
SOCC0722006

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store
SoFi Android App, Get it on Google Play

TLS 1.2 Encrypted
Equal Housing Lender