Credit Limits

That £5,000 credit limit on a new credit card may initially sound appetising, but not if all you have to show for it in three months' time is an outstanding balance of £4,500 and lots of crumpled receipts for expensive bottles of wine, out of season clothes and DVDs which you only watch once.

If you are accepted for a new credit card, it is usual for credit limits to increase over a period of time, providing you keep up-to-date with your monthly repayments. It is very rare for credit card companies to decrease your credit limit unless you specifically ask them to. We'll be looking into whether or not you should be asking for a reduced credit limit in another article.

Some credit card companies will increase your credit limit automatically, without you having to ask for it, whereas other card issuers will increase your limit if you phone up and request it. This can often be done over the phone just by asking a few simple questions about your current employment, although for more substantial credit limit increases, your credit card issuer may decide to run a credit check through one of the big credit scoring agencies such as CreditExpert, or they may require written documentation such as proof of income.

Credit limits vary from £200 for the Capital One, Credit Builder card, up to £50,000 or more for cards such as Barclaycard Platinum. In addition to this, all American Express cards come with unlimited credit, although it is hard to accrue debt with these, as a payment must be made in full each month. These charge cards, such as the Amex Small Business Gold, are aimed specifically at companies that run expense accounts for employees and wish to separate the employees business and household expenses through the use of business credit cards and charge cards.