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What is the purpose of a 100k limit on a credit card?

Valued Contributor

Re: What is the purpose of a 100k limit on a credit card?


Cdnewmanpac wrote:

CreditScholar wrote:



It's not always a waste. Sometimes jewelry can appreciate in value quite quickly. In other cases they can serve as an excellent hedge against inflation/market turmoil in the same way gold and other hard assets do.

At least that is what your fiancée with the ring that requires a 30k annual insurance premium keeps telling you Smiley Wink 

Seriously, my father in law makes frequent trips to the middle east for consulting work, often with little advanced notice. He once told me he spends upward of 30k/month on airfare alone. Since reimbursement often takes more than a month, he carries some high balances.Having a high limit card keeps him under 30% utilization, which he has chosen as a "safe" amount. He has several million in assets under management with the issuer's bank, as I believe is fairly typical for people with high limit cards. 


Actually that ring was my father's idea and a complete surprise to her. There is no way I could afford such a thing on what we make. We can handle the annual insurance premium, but the purchase price was well beyond our reach. He took care of that part.
EX 798, EQ 789, TU 784
American Express Platinum (NPSL) || Bank of America Privileges with Travel Rewards Visa Signature - $23,200 CL
Barclays American Airlines Aviator Red World Elite Mastercard - $20,000 CL || Chase IHG Rewards World Mastercard - $25,000 CL
Chase Sapphire Preferred Visa Signature - $12,700 CL || Chase United MileagePlus Club World Elite MasterCard - $26,500 CL
Citibank Hilton Reserve Visa Signature - $20,000 CL || J.P. Morgan Ritz Carlton Visa Signature - $23,500 CL
Message 11 of 24
Established Contributor

Re: What is the purpose of a 100k limit on a credit card?

It's true that most people have no real use for a $100K limit card.  I have enough credit now to easily cover my monthly expenses and with a lot of that on a charge card I don't even have to worry about utilization.  If for some reason a bank offered me a $100K limit card, it really wouldn't do anything for me, I honestly think I would refuse it.  That being said, I would think that if a bank is offering someone a card with a $100K limit, that person is very responsible with money and probably has lots of assets with that bank.  He probably also has a need for a high limit like that, because atleast some months he needs to charge a lot of money for whatever reason.

FICOs (2/24/12): EX 752, EQ 740
Chase Sapphire Preferred, Freedom; American Express PR Gold, Blue Cash Everyday
Message 12 of 24
Super Contributor

Re: What is the purpose of a 100k limit on a credit card?

For a business, $100k is a pretty modest credit line.  Many businesses will have annual insurance premiums (property, e&o, gen liability, etc...) in $50k - $100k range.  The commercial general liability for doctors, hedge funds, and law firms are just insanely high.

 

For personal spending, I can see where $100k is kind of high.  But, even personal insurance (property, auto, umbrella, personal article floaters for valuables, endorsements, etc...) can all easily add up to around $25k - $30k annually.  I'd rather charge it annually or semi than spread out payments with added fees.  Unless one has a very large CL, this is where I appreciate Amex's charge card where one can just charge it without a second thought to utility.

Message 13 of 24
Frequent Contributor

Re: What is the purpose of a 100k limit on a credit card?

$100k CL?  Wow, it must have take a lot of CLIs to get a limit that high.  I know there are also some cards out there that have no limits.  Must be for the rich and famous!

That said, to get that kind of CL then you have to demonstrate responsible behaviour in the first place and the ability to pay.  I suppose if I had a card with that type of limit AND used it for transactions near the max, I would have the resources to back it up and pay it off quickly too.  No min. payments users need apply here.

 

All that said, I do have 5 cards and most are high CLs.  2 @ 20k, 15k, 10k, 6k.  That's a total of 71k.  My current debt is 7k (after a couple large purchases and recent vacation) and I consider myself "maxed" to my ability to pay at 1.5k per month.  I will never use my CL.  But having the headroom so that my utilization rates stay low is the primary reason for high CLs.


Starting Score: 732 October 2007; Current Score: EQ 836; TU 806, November 2017; Oldest Reporting EQ Account: 15.8 years; EQ AAoA: 8.0 years; Typical credit utilization 1.8% typical single card utilization 10.6%
Message 14 of 24
Valued Contributor

Re: What is the purpose of a 100k limit on a credit card?


Roarmeister wrote:

$100k CL?  Wow, it must have take a lot of CLIs to get a limit that high.  I know there are also some cards out there that have no limits.  Must be for the rich and famous!

That said, to get that kind of CL then you have to demonstrate responsible behaviour in the first place and the ability to pay.  I suppose if I had a card with that type of limit AND used it for transactions near the max, I would have the resources to back it up and pay it off quickly too.  No min. payments users need apply here.

 

All that said, I do have 5 cards and most are high CLs.  2 @ 20k, 15k, 10k, 6k.  That's a total of 71k.  My current debt is 7k (after a couple large purchases and recent vacation) and I consider myself "maxed" to my ability to pay at 1.5k per month.  I will never use my CL.  But having the headroom so that my utilization rates stay low is the primary reason for high CLs.


With a 100k CL you don't even need to do a transaction that would raise any flags at all to the lender or FICO, a charge of 30% of your CL is enough to put you in a bad place if you had a life issue pop up that took away your employment for a few months. 

 

Cards: Chase Southwest 20k & CSR 10k & CSP 10k & Freedom 6.6k & Amtrak/Freedom 4.6k, FNBO DISC 25.1k Oregon Duck 5k, & AMEX BCP 15k & Hilton Surpass 7.5k & Delta Gold 6k & Zync NPSL, Fidelity AMEX 17k Commerce5.9k & Cash Forward 7.5k & Sams Club MC 10k, Paypal Extras MC 7.5k, CapOne Venture 15k, QS 2.5k, QS 750, Amazon 5.9k, Walmart 10k, Citi Simplicity 9k, Discover IT 16k and a nice stack of store cards.
Last APP/HP 5/15/2017 Marcus Loan. 30k
Message 15 of 24
Established Contributor

Re: What is the purpose of a 100k limit on a credit card?

In my professional life I own and run a car dealership. Lately we are running more vehicle purchases through our credit card machine than during the great real estate bubble of 2004-2007. This is disturbing to me, but we are making enough on the cars to be able to afford a 2.5% (this is our rate) hit as it's a convienence to our customers and adds up to more sales. We advertise credit cards in our marketing so we make up for the 2.5% with increased sales. Many times when we know it's a cash back card we will split the rewards with the customer so they pay 1% to us if they get back 2% cash back. I just recently ran a Mercedes Coupe at $26,000 through our credit card machine and it was an AMEX Platinum. Approved, no problem. The customer told me the only reason he was doing this was because he wanted to be qualified for a Centurion card - I said, good luck!

 

However most customers just don't have the money to afford a car and can't get a loan for what ever reason - this is scary.

AMEX SPG $30K | Citi TY Premier $20k | PenFed PlatRewards $25k | Barclay Arrival+ 40k | Chase Freedom $20k | BofA AMEX $15k | Discover IT $20k | | NASA Platinum-Advantage $20k | CapOne Quicksilver $15k | Amazon Card $10k |

My Journey from Sub-600s:
Message 16 of 24
Valued Contributor

Re: What is the purpose of a 100k limit on a credit card?

Very few holders of a 100k cc would carry a balance. However, that sort of limit lets one go on high end vacations and not worry about spreading expenses out amongst CCs. Also, high end luxury items.

 

Costco does weird, high end sales from time to time. Last year they had a diamond ring on sale (one of a kind) for just under 500k. They often carry pricey stuff in smallish or even single qtys. The most I've indulged lux stuff at Costco was a 2k bottle of 100 y/o port.


I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy18k, Amex Plat (60k H/B), Citi AA EWMC 25k
Message 17 of 24
Valued Contributor

Re: What is the purpose of a 100k limit on a credit card?

I was reading on one forum (I forget where) that some people witho limits like this have reallocated limits from cards they closed in the past. They may never plan to use the limit. People sometimes open cards for the bonuses, then close them when the AF hits. Before they close them, they reallocate the available credit to another card (same issuer).That way your Util is not affected by closing cards, because your available credit remains the same. Then later, when or if you decide toopen another card with that issuer, and they give you a smaller limit than you want, you can reallocate some of your avail credit to the new card. Lots of people do this with Chase, Or Citi for example. 


CC's: AMEX (4), Alliant Visa, PenFed AMEX, Pen Fed Promise, Citi (3), Chase (5), US Bank Cash+, Huntington Voice, UMB Visa, Nasa Plat Cash Visa, Barclay's Visa, Discover IT, Cap One QS, BOA (2), BMW Visa, 5/3 Real Life Rewards MC; FNBO Amex; Comenity Visa/MC (4), Ebates Visa Siggy, Nordstrom Visa, Walmart MC, Sam's Club MC; A few assorted store cards.

Current Scores (09/2017): EQ My Fico: 801; TU MyFico: 799; EX (My Fico): 797
Message 18 of 24
Super Contributor

Re: What is the purpose of a 100k limit on a credit card?


emptypockets wrote:

I was reading on one forum (I forget where) that some people witho limits like this have reallocated limits from cards they closed in the past. They may never plan to use the limit. People sometimes open cards for the bonuses, then close them when the AF hits. Before they close them, they reallocate the available credit to another card (same issuer).That way your Util is not affected by closing cards, because your available credit remains the same. Then later, when or if you decide toopen another card with that issuer, and they give you a smaller limit than you want, you can reallocate some of your avail credit to the new card. Lots of people do this with Chase, Or Citi for example. 


Definitely a possibility. I didn't even think of that when I responded to this thread Smiley Very Happy 

Message 19 of 24
Frequent Contributor

Re: What is the purpose of a 100k limit on a credit card?


emptypockets wrote:

I was reading on one forum (I forget where) that some people witho limits like this have reallocated limits from cards they closed in the past. They may never plan to use the limit. People sometimes open cards for the bonuses, then close them when the AF hits. Before they close them, they reallocate the available credit to another card (same issuer).That way your Util is not affected by closing cards, because your available credit remains the same. Then later, when or if you decide toopen another card with that issuer, and they give you a smaller limit than you want, you can reallocate some of your avail credit to the new card. Lots of people do this with Chase, Or Citi for example. 


That sounds like a great idea actually. I may try this with chase sometime next year.

Lender pulled 10-10-13
EQ Fico 715 | EX Fico 714 | TU Fico 703
Message 20 of 24