The credit limit is the maximum amount a person may borrow from a bank or credit institution. This upper limit protects the borrower from over-indebtedness.

In Switzerland, the credit limit is calculated in four steps: Determination of the budget, deduction of fixed expenses, calculation of the budget surplus, and determination of the credit limit. The full credit limit is not approved for every application. In addition to the ability to pay back, which determines the maximum credit limit, creditworthiness plays a decisive role.

Credit card issuers have more leeway with the card limit, as the legal regulations are less precise.

Here is a very simple credit limit calculator.

Monthly income (CHF): Monthly expenses (CHF):

How is the credit limit calculated?

In Switzerland, the credit limit is determined based on several factors and calculation steps to ensure that the borrower is able to repay the loan, including interest, within 3 years. The credit limit is calculated in the following 4 steps.

Determination of the budget: The budget is calculated by totaling all monthly income. This includes not only the net salary but also other sources of income, such as rental income or investment income.
Deduction of fixed expenses: All fixed costs, including rent, health insurance, and other regular liabilities, such as ongoing leasing contracts, are deducted from the budget, resulting in net disposable income.
Calculating the budget surplus: Variable expenses such as taxes, food, transportation costs, and other living expenses are deducted from the net disposable income. The remaining amount is the monthly budget surplus.
Determining the credit limit: The credit limit is calculated so that the loan can theoretically be repaid within 36 months with the budget surplus. This results in the maximum loan amount. As a rule of thumb, you can multiply your budget surplus by 30.

Here is a theoretical credit limit example to illustrate this.

Monthly net income: CHF 5,000
Fixed expenses: CHF 2,000 (rent, insurance, etc.)
Current variable expenses: CHF 1,500 (taxes, food, etc.)
Monthly budget surplus: CHF 1,500
Credit limit: CHF 1,500 × 30 = CHF 35,000

Is the personal loan limit always approved upon application?

No, the credit limit is not always approved when applying for a loan. The maximum credit limit is only the legal maximum amount you can borrow. The credit limit only considers the ability to pay back, but not yet the creditworthiness. Creditworthiness determines the maximum amount that lenders would trust you with.

The lender’s analysis includes the customer’s credit history, existing debts, and payment record. Negative entries in credit history databases reduce the likelihood of the loan application being approved.

If you are looking for the best possible credit with the lowest possible interest rates, you can apply for a credit offer on our homepage. It’s free of charge and without obligation.

How is the credit limit for credit cards determined?

Credit limits for credit cards are subject to the same restrictions as credit limits for personal loans, as they are regulated by the Consumer Credit Act. However, credit card issuers have much greater leeway, as the law does not define the situation for credit cards very precisely. The vagueness of the Consumer Credit Act concerning the regulation of credit cards is regularly criticized, for example, by Jacques-André Maire (member of the Swiss National Council 2009-2019).

In practice, the credit limit granted for credit cards depends solely on the credit card issuer. They grant the limit as high as the creditworthiness allows.