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Is your credit card limit the right fit for your budget?

Right-sizing your credit limit to your budget could help you repay your credit card balance in full, every month, which could help you avoid paying interest on your credit card.

Selecting an appropriate limit could help put you in a better position to pay your balance in full every month and avoid paying interest.disclaimer Here are some of the reasons why you may want to go for a lower limit.

Why a lower limit could be a better fit

There are a couple of benefits of having a lower limit on your credit card. First up, with a lower limit, there may be less temptation to spend. Even the most disciplined of savers may have said ‘just whack it on the credit card’ at some point in their lives.

Another thing to keep in mind: a higher limit can also affect things like home loan applications. A lender may look at the limit on your credit card – not how much you currently owe – when assessing your home loan application.

What’s your limit?

So if you've made the decision that you want a credit card, how do you work out the credit limit that’s right for you? Take a look at your budget (if you’ve got one) and consider your individual circumstances. Have a good think about how much you can afford to repay, in full, every month when considering what credit limit you want to apply for. This way, if you are approved and you do end up using your credit card, you'll hopefully be in a position to choose to pay off the outstanding balance in full each month so you can avoid paying interest on your purchases. If your circumstances change, you can also use your budget to consider if your credit card limit is still right for you.

It’s important to consider your own financial situation and ability to pay down debt. If you know where you sit on the spend-save spectrum, this could help you set a limit, too. It might help to err on the side of caution, particularly if you think you’re more of a spender.

In considering what credit card and limit you want to apply for, remember to consider your budget and all the fees and charges that apply to the card. And don’t forget, if you find you don't end up using the limit on your credit card, you can request a decrease.disclaimer

Balancing the budget

Your goal with a credit card might be to pay the full closing balance every month, right?

But what if your credit card debt blows out following an unexpected expense and you’re faced with the prospect of having to pay off the outstanding balance on your credit card on top of your weekly/monthly budgeted expenses? Bearing in mind any other financial responsibilities you may have, it might help to look at your financial situation and see if you could add a line item into your budget to reduce or pay off your card balance as early as possible. Every little bit you can channel into paying off your credit card could help lower the overall amount of interest you pay on your credit card.

If your credit card limit is lower, then this task may be easier. It can be much less daunting paying off a $3,000 credit card than a $15,000 one, right? Bear this in mind when considering what limit is appropriate for you and what limit you want to apply for.

Learn more about budgeting

Where do you sit on the spend vs save spectrum?

A little knowledge can go a long way towards helping you take control of your budget and your credit card. These hacks could help you gain a new understanding of your spending habits.

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What are your spending habits?

Just like fitness and food, there are good habits and bad habits when it comes to spending. To avoid credit card debt, it may help to evaluate where you stand.

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Tips for a weekly budget pulse check

Life can throw some unexpected curve balls that may lead to unexpected credit card debt. A weekly budget pulse check could help manage credit card debt.

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Information in this article refers to personal credit cards, is general in nature only and does not take into account your personal objectives, financial situation or needs.

By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.

The information is current as at May 2020 and may be subject to change. ANZ recommends you review your personal credit card contract for information about the terms that apply to you.

ANZ interest rates and fees and terms and conditions are subject to change. Refer to the current credit card interest rates, fees and terms for further information and current interest rates, fees and terms.

Applications for credit at ANZ are subject to ANZ's credit approval criteria, terms, conditions and fees and charges apply. Australian Credit Licence Number 234527.

At ANZ, if a consumer Credit Card Account has interest-free periods on purchases, the account holder can avoid paying interest on the purchases balance by always paying the full Closing Balance (or if applicable, the ‘Adjusted Closing Balance’) shown on each statement by the applicable due date. The Adjusted Closing Balance is calculated as your Closing Balance less the sum of any relevant Promotional Plan balances that relate to an Instalment Plan, a Buy Now Pay Later plan, or a Promotional Balance Transfer Plan, plus any instalments due (including instalments previously due which have not yet been paid). If the account holder doesn’t pay the full Closing Balance (or if applicable, the ‘Adjusted Closing Balance’) shown on a statement by the applicable due date, they will generally be charged interest on their purchases balance from the day after the Due Date shown on that statement. Not all transactions (e.g., cash advances) get the benefit of interest-free days. Refer to the applicable credit contract for details.


Minimum credit limits apply to some credit cards. Refer to the product terms and conditions for details.