Open-to-buy

Open-to-buy (OTB) refers to the amount of available credit on a credit card holder's account at any given time. This figure represents the difference between the credit limit set by the issuer and the current outstanding balance (including pending transactions) on the card. It is a dynamic value that adjusts as purchases are made and payments are received.

For consumers, the open-to-buy figure is important for budgeting and financial management, ensuring they do not exceed their credit limits and potentially incur fees or penalties. For businesses, particularly in retail, open-to-buy can refer to the budget available for purchasing new inventory without exceeding financial constraints. This helps businesses manage inventory effectively and avoid overstocking or understocking situations.

Cardholders can monitor their open-to-buy through online banking platforms, mobile apps, or monthly statements provided by the credit card issuer. Effective management of this amount involves regular monitoring of credit card transactions and timely payments to refresh available credit, ensuring that the cardholder does not face any disruptions in their purchasing ability due to maxing out their credit limit.

Understanding and managing one's open-to-buy is a fundamental aspect of credit card usage that helps maintain financial health and creditworthiness.