practical value of a huge credit limit?

[Anonymous]

Our friend Brutal Body Shots reminded us on another thread that when the individual credit limit on a revolving account gets high enough it can cause the entire account to be dropped from utilization -- which in turn could lead to a significant change in your CC utilization  Thus, for example, the following is conceivable:

*  Bob has had an Amex credit card with a 14k Credit limit for a long time, which typically reports a couple hundred dollars.

*  He applies for a new card and gets a 5k limit. 

*  He then makes a softpull CLI request to triple his limit.  His CL is now 42k

*  A few days later, he puts a 3k purchase on the new card.

*  Bob's CC utilization has gone from 1% ($140/$14000) to 60% ($3000/$5000)

That reminded me of the question I ask at the top of this post.  I had been wondering about that for a while.  Namely....

Is there any practical advantage from trying to raise the credit limit of any particular card past (say) 29k?

Assume that we are not talking about a consumer who needs the card for huge monthly business expenses, or a person who engages in MS (Manufactured Spending), or someone who is outrageously wealthy and might easily drop 30k on a pleasure trip to the Bahamas.  Just a regular guy with an income of under 200k.

One use that does occur to me would be if auto dealers are typically ok with you using a credit card to buy a car.  If so, then have a Citi Double Cash with a 60k limit would be nice.  You could buy a 50k car and get $1000 back tax-free (assuming you paid it off the following month).

Do auto dealers let you do that?  Can anyone think of any other practical use for a single CL that is absurdly high?

My feeling is that once you start getting close to having a single tradeline with a CL over 29k, by that time you almost certainly have at least 4-5 credit cards of different rewards types.  And once you do, it means you are already using one card for groceries, another for gas, a third for restaurants, a fourth for airfare and hotels, etc.  Aside from that example I gave about buying a car, I am having trouble imagining the use for a single tradeline that is particularly big.

Curious to hear if anyone else has ideas.

[Berk]

My utilization stays at between 1%-10%. I've never had 60% utilization. I have two cards in excess of 29K and one more getting close. The lowest limit I have on a major card is 14.5K. I am hardly unusual in this. The most practical benefit I can see is more available loans with good rates. If you are not in the market for a new house, car, RV, boat, refi, or any other major purchase, there might not be much of a practical benefit. Large overall available credit, low utilization, and higher scores are, for the most part, theoretical benefits.

[newhis]

Do you know what is the limit when a card is dropped from utilization? 30K? 40K? more?

If 30K I may need to call Discover to CLD.

[Berk]

My Discover is over 30K and it still reports for utilization.

All three CRA's are reporting my util at 1%.

[Anonymous]

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@newhis wrote:

Do you know what is the limit when a card is dropped from utilization? 30K? 40K? more?

If 30K I may need to call Discover to CLD.

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Where FICO sets that breakpoint could be a number of places.  It's probably somewhere between 30k and 50k.  It could be different values for different models.  Maybe some models it doesn't apply at all.

[Anonymous]

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@Berk wrote:

My utilization stays at between 1%-10%. I've never had 60% utilization. I have two cards in excess of 29K and one more getting close. The lowest limit I have on a major card is 14.5K. I am hardly unusual in this. The most practical benefit I can see is more available loans with good rates. If you are not in the market for a new house, car, RV, boat, refi, or any other major purchase, there might not be much of a practical benefit. Large overall available credit, low utilization, and higher scores are, for the most part, theoretical benefits.

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Hi Berk.  How does an individual tradeline with a CL of > 29k get you more available loans and at better rates?

[Berk]

It does not - in and of itself.

BTW, my experience with trying to purchase a new car in its entirety on a credit card or charge card was shot down by the dealer both times. I also tried to buy an RV the same way. In all cases I could only make a down payment. Seems like they don't want to pay the fee - can't blame them

[Anonymous]

If you go to high end car dealerships where the price is typically non-negotiable they let you use credit cards. I am talking about Maserati, and Lambo level cars here, and even then it depends on the dealership. Friend of mine bought a used G class, and they let him put up to $50k on a CC, the catch being he could only use one card. Although if you are buying the expensive of a car likelihood is you have a CC with that high of a limit. 

[Anonymous]

The $1500 I'd get back from buying a 75k car at full price would be cold comfort when I had realize and had spent 73.5k on a bleeping car.  That's just me though.  All my cars thus far have cost under 20k.

A car listing for 60k that I was getting for 40k (due to haggling with the dealer) -- and then getting some additional cash back via the CC purchase -- that makes a big CL sound attractive.  But it sounds like CC purchases of cars may only be possible for high end cards purchased at full price.

[lhcole77]

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@newhis wrote:

Do you know what is the limit when a card is dropped from utilization? 30K? 40K? more?

If 30K I may need to call Discover to CLD.

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All reports I have read on here say > $50K.

My three highest cards are 31K, 30K and 28K. They all report and factor into UTL.