As long as you aren't regularly using more than 30% of your credit limit, you can consider it to be a good limit.
A simple rule of thumb to decide if you have a good credit limit is to consider how much you regularly spend between payments. Ideally, you don't want to have your average credit card balance higher than 30% of your credit card limit.
Why? It comes down to your credit utilization ratio. Your credit utilization ratio is the percentage of your available credit that you're using and is one of the five factors that go into your credit score.
For example, say your credit card limit is $5,000. If your balance is $1,000, your utilization rate would be 20% ($1,000 / $5,000 = 0.2, which equals 20%).
A high utilization (over 30%) can cause your credit score to drop quite a bit. And maxing out a credit card can cause a lot of damage. On the plus side, your credit score should rebound after you make a payment and your balance goes back down.
Your credit limit should suit your needs
Even a high credit limit can be considered bad if it isn't high enough to meet your needs. If you apply for a balance transfer credit card and get a $10,000 limit, most people would think that's a good limit. But if you need to transfer $11,000 of credit card debt, that "good" limit isn't quite good enough.
This is a problem common to many people with small business credit cards. A $15,000 credit limit is objectively good. But you might think a $15,000 credit limit is bad if your company needs to charge $25,000 every month. Having to make multiple card payments just to use your card is inconvenient at best.
What is the average credit card spending limit?
It's human nature to compare what we have to what other folks have. So you might be wondering about the average credit limit. There isn't an easily navigable list of the average credit limits for each credit card available. But Experian found that the average U.S. cardholder had a credit limit of $30,365 in 2020.
How can you increase your card's credit limit?
Most credit card issuers will let you increase your credit limit over time.
In some cases, you don't need to do anything to get a higher credit limit. Many issuers will increase your credit limit periodically without even notifying you.
You can also request a credit limit increase. Most card companies let you do this right from your online account. Keep in mind that requesting a credit limit increase may require a hard credit pull. This can drop your credit score by a few points.
The initial limit you're given at approval is just that: a starting limit.
When you're thinking about your own credit limit, just remember that it really depends on your credit history and spending needs. And if you need a higher limit, you can work on qualifying for one over time by using your credit card regularly and paying its bills on time each month.