@Skye12329 wrote:So i have a CAP1 Cash Rewards Card, when i spoke to the rep, she stated they will automatically raise my CL if i make my payments on time..etc. Not a problem since i have never missed a payment, but my question here is, some companies from what i understand will do a SP or a HP, if CAP1 decides to automatically raise it would that be considered a SP since i didnt authorize that? Also random question, why do people complain about the limits being increased, isnt that a good thing? And if a company gives someone a limit of 10k, why do expect you not spend a bit or make a big purchase from time to time? Its so confusing, its like gettting a loan but not being able to spend it all without it hurting.
I think people get confused all the time because they don't understand what usage patterns the credit card companies want to see. Or to put it another way, what usage pattern gets rewarded with CLI's and which get penalized with a decrease. Some people want an increase, and keep using the maximum amount of a cards limit and paying it off in full. Assuming this will somehow show the company that they need a limit increase,etc.
I like this 2 part article from the BarclaycardRing blogs entitled A Case Study of a Credit Line Increase and Decrease. Especially the chart in part II, it graphically explains why people get confused, and thus frustrated, when they think credit limit increases are merely the result of using the card as much as possible. Now, there is nothing wrong with using alot of your available credit limit, just don't do that frequently or fail to pay the card off in full, and don't expect that this pattern of usage is going to be rewarded with huge credit line increases. It just doesn't work like that.
Anyways, here is a link to the blog section on Credit Limits, so you can read those 2 articles if you wish.
Thanks for finding and posting that article, themanwhocan!!!
@longtimelurker wrote:It really is quite surprising if Barclays really treats each account as a separate individual for policy decisions. Most big companies put a lot of effort into knowing the total relationship with a customer. Risk needs to be predicated on total exposure of the issuer. Here we have Cynthia earns $X and has a balance of $Y on the Ring with CL $A, and someone else (who happens to be the same person) earns $X and has a balance of $Z on another card with CL $B. Even if we discount earnings being used, looking at Y+Z and A+B gives much more info than looking at each separately. And with an approximation to income, Y and Z may each be reasonable compared to X, but the sum could be way too much for comfort. So not sure I really believe the explanation!
Its clearly an oversimplistic explanation, but probably the best we can hope for. The credit card companies are not going to give out detailed formulas, not even to most of their employees (such as customer service representatives). So this is more likely the type of explanantion they probably tell their CSR's.
Its like a credit card company that has multiple tiers of cards. If you still had a starter credit card from years back that you keep for AAoA reasons, but now you have high end cards from the same company with $450 annual fees and such, when you call the company you would be treated differently depending on which card you were calling in for a CLI on. The customer service phone number on the back of the cards would probably be different. The underwriters would be different, the CSR's might be different, etc. Now, does that company really see you as 2 separate customers? No. But an overly simplistic explanation of the situation would be to say that you are 2 people, just for the sake of discussion. And because if they told you the REAL reason, then you would always use the phone # for the higher tier CSR's, which isn't what the company would desire.
So, I wouldn't place too much thought on that part of the explanation, since it wasn't the main point of the article. The chart describing why CLI's arent a simple linear decision is whats useful to realize. Frequently we hear of someone getting a nice, moderate CLI and when asked they say their utilization was 20% (or whatever). Then someone takes that info and decides they want a much bigger CLI so they try 60% or 80%, or even way over 100% utilization by paying multiple times in a month. Then they complain that the company hates them, and never gives them any CLI. The problem is they are red-lining their account (once again, oversimplification, but we all do tend to just consider utilization when we try to optimize our chances at a CLI).
So my executive summary is: its a nice chart.