When it comes to money management, credit cards are a useful tool. They come with a credit limit that controls spending. While using a credit card, it is important to understand how this credit limit is set, ways to increase it, and the variance between the total and available credit limit.

A credit card limit is the maximum amount that a cardholder can borrow or charge on a credit card. It serves as a financial cap, dictating the extent to which one can utilise the credit card for purchases, cash advances, or balance transfers.

Understanding this limit is fundamental to managing one's financial responsibilities and avoiding potential pitfalls associated with excessive borrowing.

The factors that influence the determination of a credit limit on a credit card are as follows:

• Creditworthiness: One of the primary factors in determining a credit limit is the applicant's creditworthiness. This involves the examination of the individual's credit history. A higher credit score is associated with a higher likelihood of receiving a higher credit limit.
• Income Level: The applicant's income plays a significant role in determining the credit limit. Financial institutions assess the income-to-debt ratio, ensuring that the individual has the means to manage the credit they are seeking.
• Existing Debt Obligations: Financial institutions assess the applicant's existing debt obligations, including outstanding loans and credit card balances. This helps in evaluating the individual's capacity to handle additional credit responsibly.
• Credit Card Type: The specific type of credit card applied for can also influence the credit limit. Premium or elite credit cards may come with higher credit limits, catering to individuals with higher income levels and more extensive credit histories.
• Requested Credit Limit: In some cases, applicants may have the option to specify the credit limit they are seeking. While this doesn't guarantee approval for the requested amount, it can influence the final determination.
• Age and Credit History Length: The length of an individual's credit history is considered, and longer credit histories may be viewed more positively. Younger individuals or those with a limited credit history may start with lower credit limits.
• Utilisation Rate: The utilisation rate, which is the percentage of available credit currently being used, is a critical factor. Those with a lower utilisation rate may be more likely to receive a higher credit limit.

The following are the steps to increase your credit limit, get enhanced financial flexibility, and improve your credit utilisation ratio:

• Step 1: Monitor Your Credit Score: Regularly check your credit score to assess creditworthiness and increase the chance of a successful credit limit raise.
• Step 2: Review Your Credit Card Account: Assess payment history, credit utilisation, and financial stability to enhance approval odds of your credit card.
• Step 3: Request an Increase Online: Use online platforms provided by card issuers for limit increase requests. Log in, follow instructions, and submit your request.
• Step 4: Contact Customer Service: If no online option is available or for personalisation, contact customer service to express interest in a credit limit increase.
• Step 5: Provide Updated Income Information: Some issuers consider income for limit increase requests. Be ready to strengthen your case with current income details.
• Step 6: Showcase Responsible Usage: Demonstrate responsible credit card use with on-time payments and avoid late fees to position favourably for a limit increase.
• Step 7: Utilise Automatic Reviews: Some issuers conduct periodic automatic reviews, potentially increasing your limit based on positive usage and stability.
• Step 8: Gradually Increase Your Request: If initial requests are denied, consider asking for a modest increase, making adjustments more acceptable and increasing approval chances.
• Step 9: Consider a New Card: If efforts to increase the credit limit are unsuccessful, explore new options for different limits and increased flexibility.
• Step 10: Be Patient: Credit limit decisions take time; be patient and continue responsible management. Avoid frequent requests, as these may be perceived negatively.

In essence, your credit limit is a crucial financial boundary. This article has delved into its determination, the distinction between total and available limits, and its overall importance. Navigating this financial parameter wisely is key, impacting your purchasing ability, credit utilisation, and overall financial health.