Credit Building Tips

If My Credit Limit is $300, How Much Should I Spend?

Shaun Connell
June 23, 2023

If you've recently been approved for a credit card and your credit limit is $300, you might be wondering how much you should spend.

The first answer is never to spend more than you can afford to pay back! The second answer, though, has to do with maintaining a healthy (aka low) credit utilization ratio.

Solution icon One factor that influences your credit score is your credit utilization ratio, which compares how much credit you're using to how much you have in total. Using the general advice that you should keep your utilization at 30% or lower, you'll want to spend no more than $90 on a $300 limit card.

At the same time, many different factors might make you decide to spend more or less than this amount. Let's look at what you should know about credit limits and utilization to help you decide how much to spend.

My Credit Limit Is $300-- How Much Should I Spend?

If you have a $300 credit limit on your credit account, how much should you spend if you want to maintain a good credit score?

woman holding 300 dollars representing credit limit

Credit experts generally advise that you should keep your credit utilization ratio at 30% or lower.

Your credit utilization ratio is a percentage that represents how much money you're using on your credit accounts compared to how much credit has been extended to you.

However, if you want to have immaculate credit, some suggest that you keep your credit utilization ratio in the single digits.

  • For a $300 card, a 30% credit utilization ratio would mean spending no more than $90.
  • If you want to keep your credit utilization ratio as low as 7%, you won't want to spend any more than $21.

What Is a Credit Limit?

The total amount of money you are authorized to charge to a credit account by a credit card issuer is your credit limit.

  • This means that if you have a credit limit of $300, you can carry a balance of up to $300.
  • If you have a credit limit of $10,000, you can carry a balance of up to $10,000.

Both new purchases and balance transfers are included in your credit limit. On top of that, any other transactions- that draw from your credit line-- like cash advances-- are also included.

If you have an annual fee for your credit card, this will also be charged against your credit limit.

How Your Credit Limit Is Determined

There are three primary ways that a credit card issuer will determine your credit limit.

  • Receiving a predetermined credit limit
  • Receiving a credit limit based on your credit score and credit history
  • Receiving a credit limit that is a result of a more in-depth analysis of your credit file

Predetermined Credit Limits

There are some credit cards that come with a certain credit limit when you first open the account.

For example:

  • Some premium credit cards might come with a $5,000 no matter what.
  • The catch is that they might be harder to qualify for in the first place.

On the other end of the spectrum, a starter credit card might come with a $300 or $500 credit limit.

With this type of card, the credit limit isn't really a personalized decision. The issuer will look at your credit to determine whether to issue you the card, but they won't usually use your score to decide a precise credit limit for your account.

Credit-Based Limits

For most credit cards, your credit score will be used to determine your credit card limit.

This means that the factors that influence your credit score will impact your credit limit, including:

  • Your payment history
  • Your credit utilization
  • The length of your credit history
  • Your recent credit inquiries
  • Your credit mix

Other factors that credit card companies will incorporate when deciding on your limit include:

  • Your household income
  • Your monthly expenses
  • Your employment

The process of determining your credit limit based on your credit score is similar to how credit card companies determine the interest rate they will offer you. Some credit cards will have a range of credit limits, and people with lower credit scores will be given a credit limit on the lower range, while people with higher credit scores will be given a credit limit on the higher range.

Customized Credit Limits

In some situations, credit card issuers might create a customized credit limit for consumers. This is a way for companies to minimize risk when they are giving applicants access to new lines of credit.

Some issuers will consider your debt-to-income ratio or income when determining your customized score. Others will use a grid system to compare a number of different scores associated with your financial history.

How Much to Spend Based on Your Credit Limit

The most important thing when it comes to figuring out how much to spend on your credit card is ensuring that you only spend what you can afford.

Though it's not a disaster to carry a small balance on your credit cards, you will be paying interest if you don't pay off your balance in full every month (unless it's a promotional 0% APR card with an introductory period.)

Charging more purchases to your account than you can afford is a risky game, as it makes you very vulnerable to spiraling debt. Being buried in credit card debt is something you'll want to avoid at all costs, if at all possible.

If you need your credit score to be in tip-top shape, you'll want to keep your credit utilization ratio at 30% or lower. This means that whatever your credit limit is, you can multiply it by 0.3.

The maximum balance you should carry on your card at any given time is the result.

Is $300 a Good Credit Limit?

Your credit limit is simply the amount of money that a credit card issuer is extending to you on a particular account.

A higher credit limit can help you achieve a lower credit utilization ratio if you practice responsible credit usage. On the other hand, having a lower credit limit can ensure you don't spend more than you can afford to repay.

credit card and phone with 300 limit

According to data from TransUnion, the average credit card limit is around $13,000. However, consumers usually need to have little to no existing debt and a high income to achieve a credit card limit this high. The average American has, in total, access to a little more than $30,000 via their credit limits.

If you got a new credit card to help with your credit score and are disappointed with the low limit, it's worth understanding that using the account responsibly is the thing that will help your credit the most. After your account has been open for a specific number of months (this number will depend on your issuer) you can also request a credit limit increase.

What Is Available Credit?

Your available credit is different from your credit limit. Your available credit is how much credit you have left after your balance is subtracted from your credit limit.

For example:

  • If you have a $300 credit limit and a balance of $270, your available credit will be $30.
  • If you have a $10,000 credit limit and a balance of $270, your available credit will be $9,730.

If you pay off your entire balance in full, your available credit will reset back to your credit limit.

Is It Better to Have a Higher Credit Limit?

Having a higher credit limit comes with some benefits and drawbacks. If you recently opened a new card and you are unhappy with the limit being too low, you can request a credit limit increase. For new cards, though, you'll probably need to wait a certain number of months before the issuer will raise your limit.

Some of the pros of having a higher credit limit include:

  • You have access to more credit which allows you more flexibility in your budget
  • It will reduce your overall credit utilization ratio if you don't rack up a big balance, which can help your credit score

On the other hand, having a higher credit limit can have some downsides:

  • You have access to more credit, which opens up the potential for racking up a balance that is much more difficult to repay
  • The credit card company might do a hard pull of your credit, which can ding your credit score

How to Request a Credit Limit Increase

If you decide that you want to ask for a higher credit limit, there are a few avenues you can take:

  • Call your credit card issuer: To talk to a customer service representative, call the phone number on your card's back. You can ask them if you're eligible for an increase. They might ask whether your income has increased or why you want the increase.
  • Make a request online: It's common for credit card companies to have online portals where you can request a credit card increase. It might require that you update your personal and financial information.
  • Look for automatic increases: Once you've had the card for a while and prove that you're a responsible cardholder, you might get an automatic increase. Some companies will give out increases when they see that they are keeping their balance low and making payments on time.
  • Get a new card: If your credit is in good shape and you've been making on-time payments with your current cards, you might also be able to get a new card that has a higher limit. Even if you are approved for another $300 credit limit card, it still means you have access to more credit overall.

Practicing Responsible Credit Habits Will Help You Build Credit

Even if you're frustrated that your credit limit is $300 and not more, it's important to remember that everyone has to begin their credit-building journey somewhere!

If your limit is $300, you'll likely want to spend 30% or less of your credit limit to maintain a good credit score. In the case of a $300 limit, this means $90 or less. At the same time, how much you spend will depend on several other factors that are unique to your situation. And, you don't want to forget the most important question to ask yourself when deciding how much of your credit limit to use-- how much can you afford to pay back?

Managing a credit card account responsibly-- no matter how low the credit limit-- will help you improve your credit over time. Whether you have a thin credit profile or you're trying to increase your less-than-ideal score, it's worth investing time and energy into building your credit with responsible credit use.

Are you on a journey to improve your credit so you can have access to better financial opportunities? If so, make sure you check out the rest of our Credit Building blog!

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Written By:
Shaun Connell
Shaun Connell is a personal finance and credit expert with a passion for helping individuals eliminate debt and improve their credit. He's enjoyed writing investing and financial content for over 15 years, with expertise in real estate, debt, banking, credit, and wealth building. His work has been seen by millions on the web.

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