why have high credit limits on credit cards, compared to lower interest HELOCs etc.

[gen-specific]

Hello, 

This is mainly directed to people with JP Morgan Palladium cards, and very high credit limits on credit cards, unsecured lines.

I'm in a similar boat but not quite at that point yet. I have credit cards with 30k limits and higher (and maybe one day I'll laugh at considering these limits high). I don't own any property but it got me thinking about what others were doing

Even for us that are diligent about paying off balances, occassionally we float large balances to manipulate our credit score and credit worthiness, and this comes with hefty interest payments. Obviously its worth it if this allows you to triple your credit limit a few months later, greater access to funds, capital. Assuming you aren't a degenerate gambler or compulsory spender.

At some point these limits become purely vanity. Not just for us like me that post our limits on this website, but even personally. 

Those of us that can get 60k, 100k in unsecured credit can also own real estate and borrow against that at a MUCH lower rate. Like 5-7% APR or less, compared to 14-22% APR.

which aside from the vanity of having a card that costs $595 a year and a 100k limit, what purpose is it serving? The perks and services that come with it?

genuinely curious, I think I've reached the top of the credit card game and might have to move on to other forms of lending, its been fun though

[awp317]

I like have credit for points and rewards, I use my cards like a debit card however. I like having higher limits as some times I do have a lot of shopping or a large purahcse to make. I can put it on the card and pay it off when im paid at the end of the month. Its an easy pay day loan if you will that if done right wont cost you a penny. On my company cards I put 100k plus a month on them for a normal month. But I just bought a new car and put the down payment on my amex, thats enough points to get me a nice weekend get away in new york city. All for buying the same thing I was going to buy anyway. 

I  do also have an HELOC on a second home and a securities loan with edward jones. But the cards are more convient. For the HELOC I need to wait a day for the money to be moved and for my edward jones line unless I have my check book handy (which sometimes I dont) I need to call my advisor and have him wire the money which can take a couple days as well. So In the end, its just convient. I could never understand carrying a balance of 50-100k on plastic. That just seems outragious. 

[gen-specific]

Yeah, I'm definitely here for the points too, if I have a reason to spend

So many free flights

Well, alright then. I could see myself using a HELOC against an investment property (not a home though) as capital for other speculations, instead of for spending and consumption.

[awp317]

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@gen-specific wrote:

Yeah, I'm definitely here for the points too, if I have a reason to spend

So many free flights

Well, alright then. I could see myself using a HELOC against an investment property (not a home though) as capital for other speculations, instead of for spending and consumption.

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IDK I got it for consumption. I used part of the LOC to finance my new boat. at 2.75% I cant beat it. Used Amex for the down payment and paid off amex. Should have the line paid down by next year this time, just by using stock market dividands to pay the payments each month. Its not about how much money you have, its about how you manage what you have. 

[gen-specific]

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@awp317 wrote:

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@gen-specific wrote:

Yeah, I'm definitely here for the points too, if I have a reason to spend

So many free flights

Well, alright then. I could see myself using a HELOC against an investment property (not a home though) as capital for other speculations, instead of for spending and consumption.

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IDK I got it for consumption. I used part of the LOC to finance my new boat. at 2.75% I cant beat it. Used Amex for the down payment and paid off amex. Should have the line paid down by next year this time, just by using stock market dividands to pay the payments each month. Its not about how much money you have, its about how you manage what you have. 

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how did you get a 2.75% LOC, is that still possible today?

[awp317]

I apologize, 3.25% which is prime rate right now. Though BB&T 

[Marcos8]

You're bound to find a few answers on this I'm sure. My understanding on this is that while HELOC's may have lower rates and the interest may be tax deductable, that if you goof up you can lose your home. Regular CC's have higher rates but are unsecured but if you goof up you are not in danger of losing your home. There may be much more to it than this but thats my understanding of it.

[gen-specific]

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@Marcos8 wrote:

You're bound to find a few answers on this I'm sure. My understanding on this is that while HELOC's may have lower rates and the interest may be tax deductable, that if you goof up you can lose your home. Regular CC's have higher rates but are unsecured but if you goof up you are not in danger of losing your home. There may be much more to it than this but thats my understanding of it.

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Yes, a tolerable loss on an INVESTMENT property  

worst case scenario the renters just get a new landlord, different risk profile

in the meantime if there is no goof up, you get property that is expected to increase in value, yet get to stay liquid with all your capital, get low interest access to capital compared to other borrowings, and can also get rent income, the rent may even cover the interest cost of the HELOC capital being used

investment properties get a different set of deductions, but running it all through a business entity may let one deduct the heloc interest anyway