Although this isn’t universally true, most credit cards have three different types of limits. These are a credit limit (sometimes called a card limit), a cash advance limit, and a daily limit.

A credit limit is the highest amount the credit card’s balance is allowed to reach and essentially the largest amount a credit card user may borrow. If the balance exceeds the credit limit and the credit card is presented for another purchase, then the transaction is likely to be refused. If the transaction is accepted, there will almost always be penalties charged. With some banks, credit card holders can request the overdraft facility be removed from their accounts, and then if a transaction would push the balance over the credit limit, the transaction will be refused.

The cash advance limit is the maximum amount of cash that may be advanced against a credit card’s balance. With most credit cards this will be considerably lower than the credit limit itself. The cash advance limit is usually expressed as a proportion of the credit limit and so will change over time.

Note that cash advances don’t just include withdrawing cash through an ATM or EFTPOS purchase. It also includes using the card to buy foreign currency and for some risky transactions, such as gambling.

Finally, the daily limit is the maximum amount that can be charged each day to a credit card. This can also be considerably lower than the credit limit and is intended as an anti-fraud measure. If a card is stolen, the thieves can only charge a certain amount to the card each day, and only until the theft is noticed and reported, thus lessening the overall loss to the bank.

Daily limits aren’t programmed into every card, and they’re less common than they used to be due to the implementation of other anti-fraud measures.