With $50,000 annual income, you can expect a minimum credit limit of about $2.5 across all cards. Keep in mind that the national average limit on new cards is $3,176. Since $50k is below the average salary, you should expect to receive less than $3,176 on each card.
Average Minimum Credit for $50k Salary
$2,450 minimum (all cards)
Consumers with $50,000 salary can expect $2,450 minimum in credit limit on average. If you already have a card, simply subtract its limit from $2,450 to estimate the limit on a second card. In general, you have a better chance of getting credit by obtaining new cards than requesting limit increases. Just make sure you check if you’re pre-approved and that the lender won’t run a hard inquiry on your credit report, especially if you have no credit history.
The $2,450 number should be considered a minimum because it represents outstanding balance. Balance is only a part of total credit limit, but it provides a point of reference. Combined with the national average, the expected range ($2,450 – $3,176) aligns with anecdotal data as well (including my own experience).
These numbers come directly from data in the Federal Reserve’s Survey of Consumer Finances. Read more under the methodology section below.
Some Claim as High as 17K on $50k Salary
Forums provide a real-world view of credit limits consumers managed to obtain. Here’s one from the myFICO forums that shows an instant approval of $17,000 limit for someone with $50,000 annual income.
Like this person says, however, 17k in credit is a “shock” and certainly not the norm for $50k earners. The purpose of mentioning this is to show how varied experiences can be and that you’ll need to make the jump by applying. Again, just make sure the lender doesn’t run a hard inquiry on your credit report when checking if you’re approved.
We can break down expectations based on a few factors, like age. Here’s a table showing averages for common age groups. Remember, it shows average minimum credit limit for those who earn about $50k, not the whole population.
Late retirement seems to be the age when $50k earners have the highest credit limits at nearly $7,000. Afterwards is mid-lifers from mid-40s to mid-50s whose limits go just over $3,000. Strangely those younger than 35 and in early retirement have the lowest limits at $1.8k and $1.7k respectively. In fact consumers aged 65-74 have the lowest limits overall.
Education is an interesting angle because we typically assume higher education leads to higher salaries, which in turn lead to higher credit limits. This table shows $50k earners with different levels of education.
|No High School Diploma or GED||$1,593.01|
|High School Diploma or GED||$3,336.17|
Those with a high school degree have the highest min credit limits at $3,336, followed by those with college degrees. What’s interesting is that those with some college education receive only about 30% more than those with no GED.
This is interesting because it appears lenders tend to trust those with degrees more than those without, even if they make the same $50,000 salary. More plainly, it’s surprising because the underlying assumption that degrees produce higher income controlled for here.
Finally we can break it down by gender. In general, women get about 22% more in minimum credit than men when both earn about $50,000 per year.
This dynamic is prevalent across several industries, most famous of which is car insurance. Men, especially younger men, pay higher premiums. This table reinforces that dynamic.
An additional layer of context is the number of $50k earners that are young (<35). They represent roughly 31% of the total. When we exclude this age group, the credit limit difference between genders disappears as shown below.
Rather than a gap of $500 favoring women, the difference is a negligible $100. What does this mean for you? If you’re younger than 35 and male, you can expect less credit than your female counterparts. If you’re older, this should be about the same.
How Much Credit to Use on $50k/year
With a $50,000 salary, obtain as much available credit (aka credit limit) as possible but never use more than the lesser of 30% of it and ~$17,500 (35% of income).
This rule relies on general recommendations for revolving and total credit consumption. The industry standard recommendation for revolving consumption is 30% maximum (called “credit utilization”), but that the less you consume the better. Having huge amounts of available credit but never consuming it is a strong sign of confidence from multiple banks, which increases your credit score.
The industry standard for total indebtedness is 35% of annual income, which would be $17,500 on a $50,000 salary. Let’s look at this more.
How Salary Impacts Credit Limit
Salary is one of three criteria lenders consider when approving applications and calculating credit limit. The other two are credit score and collateral (personal assets).
Your credit score is a measure of trustworthiness based on your borrowing habits. This is where the 30% recommendation from above comes into play. Income, however, is another beast. Lenders typically want to keep your total indebtedness under a certain level or ratio — called debt-to-income.
The debt-to-income ratio (DTI) is just what it sounds like — the percent debt represents of your total income. The golden standard is 35% total indebtedness against income. Because it’s the total, having other lines of credit such as a mortgage will decrease your revolving credit card line.
The key takeaway is that your income limits the total amount you can borrow, and therefore your credit limit. That’s why you should aim for no more than $17.5k maximum in debt for a given year.
Pros & Cons of Using Credit on $50/year
In general, credit cards are useful as a source of emergency funds and as a mechanism for building credit towards a larger loan such as a mortgage (as long as they’re not secured). The typical danger is temptation to overspend given the new line, then not paying down the balance and getting behind on payments… ultimately hurting your credit score.
With a $50,000 salary, you’re living on a wage below the national average. This means you’re more susceptible to changes in the market and at a higher risk of requiring emergency funding, as well as defaulting on credit.
The ways to mitigate these risks include strict budget management and living in areas where your salary carries a higher purchasing power. With good personal financial management, you can enjoy the benefits of credit without exposing yourself to unnecessary risk.
Credit limit raw data is not available through the Federal Reserve’s SCE microdata, so we use an alternative approach. Data on total outstanding credit card balances represent minimum credit per household. Credit limit equals credit balance plus remaining credit. Subtracting remaining credit from credit limit tells us what the minimum limit is, which then serves as a reference across age, education, and gender.