Choosing a credit card
Depending on the credit card that you will apply for, there will already be a certain limit of what you will be able to have. Low interest rate cards, with no frills have lower credit limits, which will be up to maybe $5000. Now there are credit cards at the other end of the market. Platinum credit cards will higher credit limits starting at $10,000 and go up to around $100,000. If you don't need $10,000 to $100,000 credit limit, don't apply for those cards. Start with the low interest rate cards with no frills. Just because you pick a Platinum credit card, it doesn't automatically mean that you will receive a high credit limit.
How to decide on a credit Limit
Credit card companies are going to ask for your income and requested credit limit. It's important to choose a responsible credit limit for your credit card. You don't want something that is too high, where you are going to max it out and then not be able to pay it off. Credit histories are always looked at for other things such as mortgage requests, car loans and sometimes employment.
When thinking about a credit limit, it is a general recommendation to get at least 50% of your monthly income. But it is even better if you can get 30%. Therefore, if you make a monthly income of $5000, then you should request between $1500 and $2500. If you know you are going to pay it off every month, then you can get the higher credit limit. But if you have trouble with spending, then you should stick to the lower credit limit.
The only exception to this is if you are trying to max out some reward credit cards to get frequent flyer miles or reward points. If that is the case, get a higher limit but only if you are going to pay it off each month.
One thing to remember when deciding on your credit limit, is that it won't be able to change for at least 6 months. Even then you will have to request either an increase or decrease. Credit card companies are not allowed to increase your limit without your permission anymore. Keep that in mind so you're not regretting your decision within the first month.
Credit card company's decision
As mentioned above, the credit card company will have the final say on your credit limit. It will most likely be based on credit history and income. If you have a good habit of paying off your balance each month, then you will be more likely to get a higher credit limit. But you ultimately give them a starting base for them to decide.
When trying to decide on a responsible credit limit for your credit card look at the different credit cards and what type of limits they offer. Then think about your situation and request between 30%-50% of your monthly income. Remember how you handle your spending and your credit history will impact other important financial decisions. The credit card company will ultimately have the last say on what your credit limit is but it is up to keep spending responsibly. You can pick a reasonable limit and stick with it.
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