What Is Available Credit and How Does It Work?
5 Min Read | Published: May 23, 2025
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Learn what available credit means, how it’s calculated, and why knowing what your available credit is may have a positive impact on your credit score.
At-A-Glance
- Available credit is the remaining amount you can spend on your credit card before reaching your credit limit.
- To calculate available credit, subtract your card’s current balance from your credit limit.
- You can increase available credit by requesting a credit limit increase, paying off balances early, or opening a new credit card.
When you first get a credit card, your card issuer shares the card’s credit limit. But as you use the card to cover dinner with friends, buy a new outfit, or pick up food for your cat, it can be difficult to know how close you are to approaching the limit. Thankfully, many card issuers have apps or online accounts that can easily show you your card’s available credit. But there’s a simple way to calculate it, too.
Understanding available credit can help you to know how much you can charge on your card and potentially help you from getting too close to your limit. Here’s everything you need to know about available credit and how it works.
What Is Available Credit and How Is It Calculated?
Available credit is the amount of money you can spend on your credit card until you hit the credit limit. It’s also a factor in determining your credit utilization ratio, one prominent factor in calculating your credit score.
You can calculate available credit using a simple formula that uses two other numbers you’ll need to know: your credit limit and current balance. Your credit limit is the overall amount of money you can spend on a particular credit card. The current balance is the sum of purchases currently charged on your card but not yet paid for.
The formula for available credit is:
Credit Limit – Current Balance = Available Credit
When you subtract your current balance from your credit limit, the remainder is your available credit. Let’s look at an example.
Say you have a credit card with a limit of $5,000, and your current balance is $1,000. That means your available credit is $4,000, the result of $5,000 - $1,000.
Credit Limit: $5,000
| $1,000 | $4,000 |
| Current Balance | Total Available Credit |
If you carried over any of your statement balance from the prior month, that would also need to be considered in your available credit calculation. The main difference between your statement balance and current balance is that the current balance is a more accurate reflection of what you currently owe, while the statement balance is the amount you owe at the end of a particular billing period.
Why Available Credit Matters
The amount of available credit you have matters for various reasons, from potential impacts on your credit score to the amount of goods or merchandise you can purchase.
- Credit Utilization
Credit utilization is a measure of how much credit you’re using compared to your available credit across all accounts. If you have three credit cards, each with a $2,000 limit, and your current balance across all cards is $600, then your credit utilization ratio is $600 / $6,000 or 10%. It’s a good idea to aim to keep your credit utilization ratio low, ideally, even in the single digits.1 - Spending Power
A card’s available credit is the amount you can spend before hitting your credit limit, so it exemplifies how much spending power you have. Depending on your card issuer, your transactions may decline if you try to spend an amount that puts you over your credit limit. Other card issuers have more flexibility and allow card members to spend more than the limit. However, those amounts may be subject to fees or be added to the minimum payment due the next month.
Did you know?
Some American Express Credit Cards don’t come with a preset spending limit. Instead, these Cards, which include Platinum, Gold, and Green, have a limit that adapts based on factors like your purchase, payment, and credit history. Instead of checking available credit, Card Members can use the Check Spending Power tool in their online account or mobile app.
How to Increase Your Available Credit
There are several options to consider that may increase your available credit.
- Request a Credit Limit Increase
Increasing your credit limit is a process where you ask your card issuer to grant you more access to credit on an existing card. If you have a history of timely payments, you use your card frequently, and you haven’t asked for a credit limit increase in the last few months, it might be a smart move before you apply for new credit. However, note that requesting a credit limit increase can trigger a hard inquiry on your credit report. But the temporary dip in your credit score from the hard inquiry might be worth it if your available credit increases to the extent that it markedly decreases your credit utilization.2 - Pay Off Balances Early
With every payment to your card, you’re increasing your available credit. So, the sooner you pay the balance due, the more available credit you’ll have on your card to spend. - Open a New Credit Card
If you’re approved for a new credit card, that card’s credit limit becomes part of your overall available credit and could help improve your credit utilization ratio.
Frequently Asked Questions
Having a lot of available credit may be considered good if it results in a lower credit utilization ratio. Responsibly managing your credit card and paying your balance in full every month may also result in more available credit and may positively impact your credit score.
If you use all of your available credit, it means you’ll have hit or exceeded your card’s credit limit, if applicable. In this case, the card issuer may decline transactions over the credit limit, charge overcharge fees, decrease your credit limit, or increase your minimum payment. Contact your card issuer directly to confirm what happens when you reach your credit limit.
The Takeaway
Available credit is the amount that’s available to spend on your credit card, and you can quickly see this information when you log into your card issuer’s website or mobile app. Knowing your available credit can keep you from overspending on your credit card and potentially help improve your credit score by keeping your overall credit utilization lower.
1 “What Is the Best Credit Utilization Ratio?,” Experian
2 “How to Increase Your Credit Limit,” Experian
Brooke Joly is a writer on a mission to unravel the mysteries of personal finance and make them accessible to the everyday reader. When she’s not behind the keyboard, you can find her enjoying the outdoors in Charleston, SC.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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