Understanding why your available credit might be zero

Quick insights

• Your available credit is the portion of a credit card's credit limit that is still available for use; it’s calculated by subtracting the current balance from the total credit limit.
• There are a number of reasons why your available credit might not update immediately after a payment, such as payment processing times and pending transactions.
• It’s important to understand your billing cycle and its impact on when payments are reflected in your available credit—this helps avoid situations when you need to use your credit card but may be unable to do so.

Available credit refers to the portion of a credit card's credit limit that remains unused and available for purchases. For instance, if you have a credit limit of $5,000 and a current balance of $2,000, your available credit is $3,000. Your credit card balance should include all posted transactions, pending charges and holds placed on the account.

Why is my available credit zero after making a payment?

If you use all your available credit on a credit card, your credit limit might remain zero even after making a payment. Payments typically take 1-3 business days to process, and payments made after hours usually count as the next business day’s transaction. For example, a payment made on a Thursday evening via Chase's online banking might not be processed until the following Monday or Tuesday, during which your available credit may not be updated.

If your balance was near your credit limit before making a payment, your available credit might still appear low or zero immediately after payment due to the processing delay. Large pending charges, holds or security deposits (like hotel reservations or car rentals) could also temporarily reduce available credit to zero. These holds are reserved against your credit limit and can last until the merchant finalizes the transaction.

For example, if the rental company places a $500 hold and your total credit limit is $2,000, your available credit immediately drops to $1,500. If you also had charges, including the actual cost of the car rental, that add up to $1,500, that could reduce your available credit to zero. The rental hold usually remains until the rental company processes the final payment after you return the vehicle, which can take several days, during which your credit limit remains reduced by the amount of the hold.

How long does it take for available credit to update after a payment?

The processing time for payments can vary. Here are some guidelines for assessing when your payment might be reflected in your credit limit:

• The type of payment can dictate the length of time it takes to process, for example:
  • Electronic payments made through your credit card issuer’s app or website might be processed in as little as 24-48 hours.
  • Checks might take 3-5 business days upon receipt.
  • Direct bank transfers are harder to predict, as the time can vary based on the standard operating procedures of the banks involved.
• Payments made outside of your bank’s hours of operation, including nights, weekends or holidays, can be processed the next business day, which can extend the time it takes for your available credit to update.
• Payment alerts can be a helpful way of tracking when a payment is reflected in your credit limit. For example, setting up payment alerts through the Chase Mobile^® app can help you track when payments are processed and when your available credit is updated.
• To ensure payments reflect in your available credit by the start of the next billing cycle, consider scheduling payments at least five days before the due date.

Can I still use my credit card when my available credit is zero?

When it comes to using your card past the credit limit, there isn’t a blanket answer that applies to all circumstances. However, transactions attempted without any available credit will generally be declined, which can prevent you from making further purchases.

To manage your credit card use effectively and avoid zero available credit, consider using budgeting tools and spending trackers. Some cards offer over-limit features, which allow transactions to go through for a fee and prevent transactions from being declined. In emergencies, contacting your credit card company to discuss temporary credit limit increases can provide a buffer, allowing continued use of your card.

Best practices for managing your credit card to ensure available credit

The best way to continue using your credit card is to avoid spending up to, or over, your credit limit in the first place. Here are some tips that can help you avoid going over your card’s limit:

• Credit utilization: There are many benefits to maintaining a healthy credit utilization ratio, including credit score impact, easier debt management and, of course, avoiding a credit balance of zero. It is generally recommended to keep your credit utilization ratio at or below 30%, with 20% or lower considered ideal. For example, if your total credit limit across cards is $5,000, aim to keep your cumulative balance under $1,500.
• Alerts and monitoring: Setting up customized alerts for low available credit or when you’re approaching your credit limit can help manage spending, as can monitoring your credit card statements. Many credit card apps offer customizable alerts that notify you when you're nearing your limit, when you’ve made a purchase, in the event of unusual activity and more.
• Credit limit increase: Requesting a credit limit increase from your credit card company can be strategically beneficial after a period of consistent on-time payments and low credit utilization, but it's important to consider your overall financial stability before doing so.
• Budgeting: Whether you’re trying to manage credit card use, limit spending, enhance financial wellbeing, or anything else, creating and following a budget is something that can provide potentially lifelong benefits. There are plenty of free budgeting apps that can help you get started and stick to a budget.
• Educational resources: Whether you use a financial app from a third-party site or your credit card company, there are plenty of tools and resources available to help you manage your credit—and credit score—effectively. It can be helpful to review all available options to find the option(s) that is the best fit for you.

The bottom line

Timely and informed credit card management can help you avoid issues like running out of available credit, which can impact your purchasing power and credit score. By engaging with your financial institutions, tracking your spending and credit utilization and making use of other credit management tools you may be able to use your credit more effectively. There are numerous resources available to help you learn about credit management, enhance financial literacy and pave the way for better financial health and opportunities.