When it comes to credit and the proper management of it, there are definitely a lot of questions to consider. The main one that seems to come up often would have to be: what is a good credit limit? Well, the answer to that is kind of relative. In other words, it depends. 

However, there are certain baseline figures that can be utilized to everyone’s benefit. Either way, when it comes to answering this question, there are several factors that you will need to keep in mind:

You need a credit limit that will fully suit your needs.

Again, this all goes back to your credit limit being a relative consideration. According to the experts at SoFi, the average credit card limit for most Americans in 2020 was just over $3,000, but some people will get by just fine with much less than that and a few people will need much more than that to be able to survive and thrive.

You need to be aware of your credit utilization ratio.

Your credit utilization ratio can simply be defined as the percentage of the available credit that you are using. By most accounts, you will not want your card balance to be higher than 30 percent of the available credit that you have on the card. This means that if you have a card with a limit of 5 grand, it shouldn’t be higher than $1,500. 

In other words, your credit utilization ratio would be sitting right at the borderline at that 30%. However, if you only owed $1,000 on that instead of $1,500, you would only have a utilization rate of 20%. Naturally, if you have a utilization rate that is higher than 30%, this can cause your credit score to be dinged quite a few points.

Keep the average credit limit in mind.

America is a country that has been built on capitalism, so you will absolutely have to keep the average spending limit in mind. In 2019, Experian noted that this average spending was upwards of at least $31,000 or more.

Be aware of how you can raise your card’s credit limit.

Of course, there are certain occasions when you might want to raise the credit limit of one of your cards. That is the great thing about card limits; they are usually not set in stone. That is because the initial limit that you receive is usually just that: a starting limit. Indeed, there are many cases where you won’t even need to do anything to get a credit limit increase; it will just happen automatically. However, if you are ready for one and do not want to wait, you often can go ahead and ask for a credit limit increase right from the dashboard of the website of credit card.

So what is a good credit limit to have? The answer to that question is two-fold, and it is whatever limit that you can manage efficiently and whatever level will fully meet your needs.