@yfan wrote:
@Anonymous wrote:At the risk of sounding political. This strikes me as oddly familiar to the gun control debates individuals have. "Only a mass murderer would need that type of weapon"
At the risk of sounding political, that and somoene in the military. In my judgment that is both a correct argument and an inapt analogy in the current discussion.
The key difference is the potential for harm from high credit card limits and the possibility of those being maxed out is generally to oneself. If I get a ton of high limit cards and then decide to max them out, the harm done by it - high interest payments, financial stress, and possible bankruptcy - is predominantly to myself, not others (except my creditors in cases of bankruptcy).
Going back on topic though, is there a risk that with high limits, someone may find it easier to go on a spending spree and find themselves in greater debt? The answer to that question is pretty clearly in the affirmative. Market research shows that those spending with a credit card generally spend roughly 15% more than those spending cash only. There is also a reason why banks do income verification to ensure that one has the ability to pay their credit cards, and that factors into deciding limits often. You can't blame people for having a general perception, even if that perception does not apply to you individually.
Certainly, having high limits does not automatically mean that one is going to be in debt. The key is to know one's own spending patterns and vulnerabilities.
Yes, this is a :"hooray for credit cards" forums, and a lot of the misconceptions have at least a grain of truth. So a lot of people cite the reason for high CL, CLIs and total credit limits as "utilization" And yes, this can impact credit score if you don't PIF before the statement closes (and so what it many cases) but it also allows to put more on your cards, allowing you to spend more ("hey my util is only 5%! Yes, 5% of $250K, but only 5%") Now as you say, not everyone chasing high CLs is going to be in debt, but it certainly enables it more easily.
