How much available credit should I have on my credit card?

The amount of available credit on your credit card at any given time is known as the credit utilisation ratio. For example, if you have a credit card with a $5,000 limit and a balance of $2,500, your credit utilisation would be 50%.

There is no hard and fast rule about how much available credit there should be on your credit card at any time. However, since the credit utilisation ratio is one of the key factors used to calculate your credit score, it’s probably better to use as little as possible.

What is a good amount of available credit on a credit card?

There is no specific rule that applies universally.

Experian, one of the main credit reporting bureaus in Australia, suggests using 30% of your available credit as “an easy benchmark to help make sure you don’t use too much of your available credit”.

That being said, Experian also points out that keeping your credit utilisation ratio as low as possible can benefit your credit score and finances.

Does having a low amount of available credit damage your credit score?

According to Experian, having a low amount of available credit correlates with lower credit scores. Conversely, having a high amount of available credit correlates with higher credit scores.

However, correlation is not causation. It may be the case that, on average, people with a small amount of available credit do not manage their finances as well — hence why they’ve used up a lot of their available credit — and may also be less meticulous with maintaining a timely repayment history.

Note that other lines of credit, such as a personal loan or overdraft facility, are also used to calculate your credit score. So it may be possible to have used most of your available credit on one card and very little on another.