---
title: "What is Credit limit? | Benefit Systems"
description: "A credit limit is the maximum balance a card account may carry between statements."
source: "aus dem gebauten HTML abgeleitet"
---
# What is Credit limit?

A credit limit is the maximum balance a card account may carry between statements.

Also called: Credit line.

## How it works #

The limit constrains more than large purchases: rental car deposits and hotel holds block part of it temporarily. Increases are usually available and, at many issuers, without a fresh hard credit check, while reductions are made by the bank on its own initiative. Anyone regularly close to the limit should pay down mid-cycle, otherwise transactions start getting declined.

## Not to be confused with #

A credit limit is not the same as available credit: pending authorisations and unbilled purchases reduce the amount actually usable.

## In German #

The German term is Kreditrahmen. [German version of this term](/de/glossar/kreditrahmen)

## Related terms #

- [Credit utilization](/en/glossary/credit-utilization): Credit utilization is the ratio between the balance on a card and its credit limit, expressed as a percentage.
- [Credit inquiry](/en/glossary/credit-inquiry): A credit inquiry is a lender’s check of a credit file; a hard inquiry is recorded and visible to others, while a soft inquiry is not.
- [Carrying a balance](/en/glossary/carrying-a-balance): Carrying a balance means leaving part of a card bill unpaid so that it rolls into the next month and accrues interest.

## Articles that use this term #

- [How much credit limit do you need?](/en/knowledge/credit-limit)
- [Does applying for a credit card hurt your credit score?](/en/knowledge/credit-card-application-score)
- [What does carrying a balance actually cost you?](/en/knowledge/carrying-a-balance)
- [how-us-credit-reports-work](/en/knowledge/how-us-credit-reports-work)
- [Cancel the card or downgrade it?](/en/knowledge/cancel-or-downgrade)
- [When is an authorized user card worth it?](/en/knowledge/authorized-users)