I know having big lines is nice but what's the point?

[IWOL]

Was wondering for those of you that have huge amonts of revolving available credit, what purpose does it really serve.

take a person that makes a very nice living at $250K a year. Assuming a mortgage comenstruate with that salary....say $5k a month, maybe 2 nice cars Etc.

Your monthly spend outside of mortgage and car, even if you live lavishly wouldn't/couldn't be more than say 10 to 12k a month....or let's say you really like to live it up and spend all your monthly disposable income and we put it 16k. 

If you pay in full most/all of the time than say 30k in revolving credit would be more than enough to meet those needs. I understand that sometimes there is a crash crunch or whatever...so then 50k would more than coveri it. But I see some here that have 100's of thousands in revolving lines. 

Some say its good to have for emergencies....how many people have an emergency and run up cards 3 times their annual income.

im not knocking having a large amount of available credit just wondering why someone who spends 15k a month, PIF would need so much. Seems to me like that situation can just be a setup for bankruptcy.

[enharu]

It really depends on your lifestyle and needs.

Most people need bigger lines because they put business / reimbursable expenses on their personal cards. That alone can sometimes add up to a 5-6 digit bill each month, depending on your profession.

And then there are people who just want bigger lines just so they have the flexibility, if they ever need it. There's nothing wrong with planning for worst case scenario. You just never know how much you need during an emergency, because like the saying goes: when it rains, it pours.

And obviously there are people with huge lines or are trying to get huge lines that are using them irresponsibly. Well some people have to learn things the hard way. So be it.

And back to the example you gave:

A 5k mortgage payment is pretty standard, or even considered somewhat insignificant, depending on which part of the country you reside in. Same goes for expenses. Someone who's living in the middle of nowhere may think 15k is a lot of disposable income to spend, whereas for some people 15k may just be equivalent to several nights out at the club or cost of a few fanciful meals at a prominent restaurant.

[IWOL]

Enharu...I realize there are people who spend far more, but if you make 250k gross with mortgage interest and other deductions you probably take home around 200k a year. In my example.... I was saying that someone who earns 250 k might have around 15 in disposable income a month assuming that is their only income.

Since I joined this board I have increased my revolving credit from 10k to now close to 70k. Its been a fun ride but I've started to wonder....do I really need more CLI and more cards, so just wanted to get some perspective from you guys.

It's easy to get caught up in the game of seeking more credit and larger lines but I think often unnecessary. 

[xerostatus]

Float, financing large(r) purchases, utility, emergencies. You can benefit from larger credit lines within any of those purposes.

you can choose to carry a balance if needed without worrying about dramatic increase in utility.

you can enjoy that cash float, even if you pif.

etc

banks dont give out big limits to people who engage in behaviors that statistically lead to default and/or bk.

its called your credit score/reports..

[enharu]

Credit card charges may not necessarily be personal expenses as well. Some people, especially people whom are self-employed, put their business expenses on it. It's really just a convenience factor rather than having to differentiate between which card to use over which at all times.

People often also put reimbursable expenses on their personal cards. for people that happen to travel a lot on their jobs, such as consultants, all these hotel, airfare, car rental and misc expenses can add up to quite a bit each month. A month's worth of hotel bills at a Hotel can add up to several thousand dollars each month easily, and that's not including any other expenses. People in this category can sometimes spend almost as much as they make, but their expenses are reimbursed by the company. There's no incentive to charge everything on the corporate card and miss out on all the rewards.

Also, if you have to bring clients out for dinners, events and pay for their expenses, all these can add up to a lot of money too.

[IWOL]

"banks dont give out big limits to people who engage in behaviors that statistically lead to default and/or bk.

its called your credit score/reports.."

 xeroststs.....if that was the case you wouldn't have people declaring bankruptcy with debts in te millions and assets in the thousands

[enharu]

Theres only so much a credit report can tell you. Just like analyzing a stock's historical performance is not enough to predict its future performance. That however does not mean companies or individuals should totally disregard historical performance.

And more importantly, no one can really predict the future regardless of whatever data or analytical tool you have on your hands. Companies, including banks themselves, go bankrupt from time to time.

[xerostatus]

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@IWOL wrote:

"banks dont give out big limits to people who engage in behaviors that statistically lead to default and/or bk.

its called your credit score/reports.."

 xeroststs.....if that was the case you wouldn't have people declaring bankruptcy with debts in te millions and assets in the thousands

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you have to look it on a larger scale, in the grand scheme of things. as earlier mentioned, there will always be individuals who use their credit irresponsibly.

once a deadbeat, always a deadbeat, in a way. the larger credit lines they were issued isnt the core problem, its first and foremost their poor choices/behaviors, and secondly the bank not having done their due diligence in not lending to a high risk person. as mentioned already, higher credit lines are infinitely useful on many facets to responsible borrowers.

[Vegas247]

IWOL...i was asking myself the same question because I see a lot if not most everyone here wanting a higher credit limit. I do as we'll want higher credit limits.  I will start using my cards to pay my business expenses....I spend about 4 k a month on ads for small businesses on google, and instead of using my merchant check card to pay, I will use my new cards, so I can get credit and build for more later. As I get more clients, my google Adwords bill goes up.......and it's nice to have a high credit card limit to cover the expense......that's my situation.....I do see others with crazy 100 k limits, and i do wonder how much they have to spend on their cards a month to keep the CCCs happy.

[unc0mm0n1]

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@Vegas247 wrote:

IWOL...i was asking myself the same question because I see a lot if not most everyone here wanting a higher credit limit. I do as we'll want higher credit limits.  I will start using my cards to pay my business expenses....I spend about 4 k a month on ads for small businesses on google, and instead of using my merchant check card to pay, I will use my new cards, so I can get credit and build for more later. As I get more clients, my google Adwords bill goes up.......and it's nice to have a high credit card limit to cover the expense......that's my situation.....I do see others with crazy 100 k limits, and i do wonder how much they have to spend on their cards a month to keep the CCCs happy.

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I have 100K in cards and I run about 20-22K through my cards a month. I will be spending a month in a hotel soon on a personal credit card, expenses add up quick. I think the answer to the original question is that not everyone is the same. I need my high limits because even though I pay in full sometimes my statement cuts with a balalnce and I don't want my score to drop. Another thing I love is that I have an Amex with 15 months 0% APR. Because the limit is soo big and I have so much other available credit. I can keep 8K on it as an interest free loan. If I had much lower credit limits revoling such a b ig debt would kill my score. Maybe you don't use your increased credit, which is completely fine but some of us do and having it is helpful.