topic Re: Any downside to having big limits? in Credit Cards

Any downside to having big limits?

CF_Frost — Sun, 28 Aug 2016 15:26:59 GMT

I have about $45K income about three years history. I now have a $39,500 limit on my Discover and a $34,000 limit on my Amex due to generous lenders and soft pull CLIs.

I only have four cards, with my lower limits being with Chase since they he hard pulls.

I'm concerned that lenders will see these larger limits and be hesitant to give me a card with a decent limit, despite no inquiries and high 700s scores. I'm assuming this could h a downside to having large vanity limits, but are there any other negatives? Could it be an issue when I go to purchase a house or finance a vehicle?

Re: Any downside to having big limits?

Samac — Sun, 28 Aug 2016 15:28:57 GMT

The potential downside is a lender declining you for your exposure compared to your income.

Re: Any downside to having big limits?

redbeard — Sun, 28 Aug 2016 15:38:34 GMT

For the most part, lenders do whatever lenders want to do. A well managed high limit on another card can persuade another lender to give you a large limit, but a different lender may decline due to available credit. I gave up worrying about that stuff.

Large limits won't matter to an auto finance, or if anything, it will help. Home loans always change what they want, but if they want the limits reduced for reduced exposure, they will simply tell you to request a lower limit. In both cases, no need to worry.

The big risks to me about having high limits:
- Impulse control: A lot of people have been known to buy things that they need on credit, when in reality, life would have been fine without it. A moment of weakness can cause a years worth of pain in paying it off. Some people are much better disciplined about this.

- Fraud: If you have ever had a credit card mis-used by someone else, especially someone you know, you can quickly understand the pain this can cause. Yes, 0 fraud liability, but the process can be a pain in the butt, and sometimes, the merchant pushes back about it. Most fraud is easy, but sometimes it isn't. The good news is most credit card companies are very good about cutting off out of pattern spending until they can confirm it is legit.

Seriously though, if you have 4 cards so that if any one has a problem, you aren't stuck, then you are good to go. I wouldn't push my limits higher or start app'ing everywhere, but be very content with what you have.

Don't run the cards up to the max either!!!!

Dan

Re: Any downside to having big limits?

UncleB — Sun, 28 Aug 2016 15:39:36 GMT

@CF_Frost wrote:
I have about $45K income about three years history. I now have a $39,500 limit on my Discover and a $34,000 limit on my Amex due to generous lenders and soft pull CLIs.

I only have four cards, with my lower limits being with Chase since they he hard pulls.

I'm concerned that lenders will see these larger limits and be hesitant to give me a card with a decent limit, despite no inquiries and high 700s scores. I'm assuming this could h a downside to having large vanity limits, but are there any other negatives? Could it be an issue when I go to purchase a house or finance a vehicle?

It's really YMMV when it comes to how other lenders might react to you having so much available credit.

I'm in much the same situation, with similar income and total credit lines now over $100k. I'll say that when buying a car, if you use dealership financing all they care about is your score and that your bills are paid... they aren't concerned with total exposure at all. Of course if your cards are maxed out and your income on paper isn't enough to make the minumum payments if an auto loan is added that would be a problem, but I'm assuming here that we're just talking about available credit.

When you go to buy a house, it will depend on the mortgage program and your broker; some won't be concerned, and some might suggest for you to have your exposure lowered. I would never lower my exposure on my own, though, since depending on your specific profile lowing your exposure could even lower your score (since it can increase utilization)... this is why you get a good broker that you trust - let them direct you what to do when the time comes.

As far as other credit card issuers being concerned with exposure, so far it hasn't been a problem with me, since like you I mostly depend on SP CLIs (with the notable exception of my Synchrony accounts, and my exposure/income ratio didn't bother them). I've read that it might become an issue if you request additional CLIs that require manual review, and some CUs might be sensitive (since many of them rely on manual review as well), but in general it's not something you read a lot about.

Just my 2¢.

Re: Any downside to having big limits?

Anonymous — Sun, 28 Aug 2016 15:48:38 GMT

@UncleB wrote:
@CF_Frost wrote:
I have about $45K income about three years history. I now have a $39,500 limit on my Discover and a $34,000 limit on my Amex due to generous lenders and soft pull CLIs.

I only have four cards, with my lower limits being with Chase since they he hard pulls.

I'm concerned that lenders will see these larger limits and be hesitant to give me a card with a decent limit, despite no inquiries and high 700s scores. I'm assuming this could h a downside to having large vanity limits, but are there any other negatives? Could it be an issue when I go to purchase a house or finance a vehicle?
It's really YMMV when it comes to how other lenders might react to you having so much available credit.

I'm in much the same situation, with similar income and total credit lines now over $100k. I'll say that when buying a car, if you use dealership financing all they care about is your score and that your bills are paid... they aren't concerned with total exposure at all. Of course if your cards are maxed out and your income on paper isn't enough to make the minumum payments if an auto loan is added that would be a problem, but I'm assuming here that we're just talking about available credit.

When you go to buy a house, it will depend on the mortgage program and your broker; some won't be concerned, and some might suggest for you to have your exposure lowered. I would never lower my exposure on my own, though, since depending on your specific profile lowing your exposure could even lower your score (since it can increase utilization)... this is why you get a good broker that you trust - let them direct you what to do when the time comes.

As far as other credit card issuers being concerned with exposure, so far it hasn't been a problem with me, since like you I mostly depend on SP CLIs (with the notable exception of my Synchrony accounts, and my exposure/income ratio didn't bother them). I've read that it might become an issue if you request additional CLIs that require manual review, and some CUs might be sensitive (since many of them rely on manual review as well), but in general it's not something you read a lot about.

Just my 2¢.

I have to agree with UncleB. For many, just managing your CL well and keeping your utilization low is enough to not cause problems. That being said, some financial institutions (such as credit unions) will tell you that you don't need any more credit (at least not from them.)

Re: Any downside to having big limits?

Anonymous — Sun, 28 Aug 2016 15:52:48 GMT

@redbeard wrote:
For the most part, lenders do whatever lenders want to do. A well managed high limit on another card can persuade another lender to give you a large limit, but a different lender may decline due to available credit. I gave up worrying about that stuff.

Large limits won't matter to an auto finance, or if anything, it will help. Home loans always change what they want, but if they want the limits reduced for reduced exposure, they will simply tell you to request a lower limit. In both cases, no need to worry.

The big risks to me about having high limits:
- Impulse control: A lot of people have been known to buy things that they need on credit, when in reality, life would have been fine without it. A moment of weakness can cause a years worth of pain in paying it off. Some people are much better disciplined about this.

- Fraud: If you have ever had a credit card mis-used by someone else, especially someone you know, you can quickly understand the pain this can cause. Yes, 0 fraud liability, but the process can be a pain in the butt, and sometimes, the merchant pushes back about it. Most fraud is easy, but sometimes it isn't. The good news is most credit card companies are very good about cutting off out of pattern spending until they can confirm it is legit.

Seriously though, if you have 4 cards so that if any one has a problem, you aren't stuck, then you are good to go. I wouldn't push my limits higher or start app'ing everywhere, but be very content with what you have.

Don't run the cards up to the max either!!!!

Dan

Most merchants can push back as much as they want these days... But the fact of the matter is, banks/issuers will LOVE to take advantage of the liability shift and collecting their customer's money back, along with a profitable chargeback fee.

Now is the perfect time for the banks/issuers to burn merchants for not buying EMV capable terminals and/or having the software and certification done in time, and as a customer, I fully back the bank's action in those types of situations.

I don't see many merchants having much success pushing back, not that they did before, especially with American Express.

With the current state of credit card payment infrastructure in America right now, it's easy to believe the consumer.

Re: Any downside to having big limits?

Gmood1 — Sun, 28 Aug 2016 15:54:11 GMT

^^^^^^

What UncleB said!😀

Try not to read too much in to it. I try not to fixate on what other creditors might think.

Apparently you have good credit and someone will give you a loan if you need or want it.

Keep doing what your doing.

My individual income isn't a long way from yours and I'm over $300k in exposure. I haven't had anyone come knocking at the door to take my credit away. They do badger me constantly about giving me more. lol

You'll be fine.

Re: Any downside to having big limits?

redpat — Sun, 28 Aug 2016 16:18:10 GMT

@CF_Frost wrote:
I have about $45K income about three years history. I now have a $39,500 limit on my Discover and a $34,000 limit on my Amex due to generous lenders and soft pull CLIs.

I only have four cards, with my lower limits being with Chase since they he hard pulls.

I'm concerned that lenders will see these larger limits and be hesitant to give me a card with a decent limit, despite no inquiries and high 700s scores. I'm assuming this could h a downside to having large vanity limits, but are there any other negatives? Could it be an issue when I go to purchase a house or finance a vehicle?

You said it best "having vanity limits", I think these forums lead to asking for CLI because they see others getting them. At a certain point in time there is really no benefit for asking for CLIs when the current limit is sufficient for what you use the card for.

Also, if you chose to get another card or change reward programs there is nothing wrong with closing an account that you don't use anymore to maintain a certain amount of open credit. Credit is always evolving and making changes are a part of it.

Re: Any downside to having big limits?

Anonymous — Sun, 28 Aug 2016 17:18:24 GMT

If a lender is ever hesitant to approve because of your available credit, just remind them that it's not about the size of your limits, but it's about how you use them.

Re: Any downside to having big limits?

Sharingan — Sun, 28 Aug 2016 17:49:30 GMT

The only downside I have experienced is when I want additional products from the same bank that I already have a large exposure with. Those instant approvals aren't as frequent in such scenarios. Even then, it's fairly easy to fix with a phone call or preemptively lowering limits beforehand. Citi and American Express may require a call to pull a certain amount from another product. Bank of America's computer seems to randomly pull credit from whichever card it wants, although my Merrill+ is never selected. Barclays has yet to pull my report if the reason is for "sufficient credit with the bank," which I'm sure would require a recon call. I still haven't encountered any obstructions with Chase yet despite around 90k exposure with them across a few cards. Capital One... isn't even a concern since they don't have anything else I would want in exchange for so many inquiries, so I'm not sure how they respond.

Regardless, I have yet to encounter issues with new lenders or when I take out new auto loans.

Re: Any downside to having big limits?

kdm31091 — Sun, 28 Aug 2016 17:59:03 GMT

The main thing you can run into is lenders being wary of your exposure and not wanting to give you more credit. In some cases you can face adverse action and have limits lowered if a lender feels you are at risk of charging up a large amount that you can't pay. For that reason, I think it's a good idea to keep exposure moderate. Having a buffer for emergencies is nice, but having excessive exposure has no real benefit IMO, just makes you stand out and not in a good way.

Re: Any downside to having big limits?

Burned2manybridgesB4 — Sun, 28 Aug 2016 21:40:18 GMT

Prybar accounts are a good thing. Down the road you can look at the four digit cards, and say "see ya." When you hit $10k it's now a chase to $25k, then $40k cards... Never ends.

Re: Any downside to having big limits?

Viva-LV — Sun, 28 Aug 2016 22:58:14 GMT

I would concur with the replies here: nothing really to lose by acquiring more credit. I'm at $215 cl"s, which is almost double my income (I'd like to get to $250k). Haven't been denied an app because of too much available credit (yet). I'd recomend starting a relationship with a CU, like an Alliant or Penfed. Very good rates for all products. Congrats on your lines and good luck!

Re: Any downside to having big limits?

Anonymous — Mon, 29 Aug 2016 00:13:49 GMT

@Burned2manybridgesB4 wrote:
Prybar accounts are a good thing. Down the road you can look at the four digit cards, and say "see ya." When you hit $10k it's now a chase to $25k, then $40k cards... Never ends.

Why would you want to though? What real-world benefit do you get with a $100K card vs a $50K one? Or a CL of 10 x income vs 5?

tI can end at any time you decide "I have enough" or issuers decline to give any more.

Re: Any downside to having big limits?

Burned2manybridgesB4 — Mon, 29 Aug 2016 00:17:35 GMT

@Anonymous wrote:
@Burned2manybridgesB4 wrote:
Prybar accounts are a good thing. Down the road you can look at the four digit cards, and say "see ya." When you hit $10k it's now a chase to $25k, then $40k cards... Never ends.
Why would you want to though? What real-world benefit do you get with a $100K card vs a $50K one? Or a CL of 10 x income vs 5?

tI can end at any time you decide "I have enough" or issuers decline to give any more.

As far as my stack, as the limits grow, the pile decreases. Not easy to get needed credit when you're in a bind. Sooner or later everyone's in a bind.

Re: Any downside to having big limits?

Anonymous — Mon, 29 Aug 2016 02:20:49 GMT

You soooo right. I had to run up almost 20k in debt and i barley hit 20% on the cards i had. Now they are ALL paid off but the banks never called me or anything when i put 2k every month on for a year while only paying the minimum.

Re: Any downside to having big limits?

takeshi74 — Mon, 29 Aug 2016 13:16:08 GMT

@CF_Frost wrote:
I have about $45K income about three years history. I now have a $39,500 limit on my Discover and a $34,000 limit on my Amex due to generous lenders and soft pull CLIs.

It's not due to generosity. Creditors are not charities. They're businesses. They extend credit to you based on risk analysis and what they look at is your credit profile. Your limits are due to your credit profile and your income.

Re: Any downside to having big limits?

Anonymous — Mon, 29 Aug 2016 13:23:53 GMT

@takeshi74 wrote:
@CF_Frost wrote:
I have about $45K income about three years history. I now have a $39,500 limit on my Discover and a $34,000 limit on my Amex due to generous lenders and soft pull CLIs.
It's not due to generosity. Creditors are not charities. They're businesses. They extend credit to you based on risk analysis and what they look at is your credit profile. Your limits are due to your credit profile and your income.

Not all creditors are alike.

Banks want to pack their wallets fatter and fatter by making you pay high interest, fees, and gaining an interchange fee every time you swipe your card.

Many credit unions offer cards with low to no fees, interest rates in the single digits, and make most of their money off of the merchant instead when you swipe your card. Many credit unions also cap the amount of money they'll let you borrow on a credit card (many state the limit, and it's usually not more than 40k or 50k). I couldn't imagine seeing anyone with a Navy FCU Card that has a $115,000 limit.

Re: Any downside to having big limits?

RCFL — Mon, 29 Aug 2016 16:14:07 GMT

OP, did you put 45k as your income on the application or you put more than that? My income is higher but still stuck at 13.5k with Discover...

Re: Any downside to having big limits?

Blackbeauty212 — Mon, 29 Aug 2016 17:01:22 GMT

Hoarding Credit is Bad ... and it can adversely affect your ability to borrow in the Future. There is a such thing as "Too Much Available Credit"

* Most Mortage lenders will reject, request accounts be closed or limits reduced before allowing approval.

* Credit Unions will decline or require strict manual review based on Available Credit.

* Economic downturns like '08 puts a bullseye right on your back when Creditors come for Slashing Exposure.

With that said 4 cards with High limits is not something I would worry about. However I still wouldn't go around app spree'ing, opening a bunch of new cards. IF you're going to open a new card, I would consider closing an existing one, especially if the Lender comes close or matches the current limit on your exisiting card so that your not adversely affecting your UTL score.

I would much rather have just 4 cards with >20K limits, than say 10-15-20 cards to manage regardless of their limits.. I personally have a internal limit, I don't want any of my TL's >20K, there's nothing I need on a Credit Card >20K limit can't afford me.

Don't get caught up in the Vanity that "CREDIT = INCOME" ... Too many people are vicitims of thinking the "More Credit I have, the More Weathly I am, the More Status I Have". You see it right here in this forum. No reason someone with $50K year income has 200K worth of Available Credit.