topic Re: Lowering Limit on Credit Card in Credit Cards

Lowering Limit on Credit Card

Anonymous — Fri, 30 Jan 2009 22:09:16 GMT

My husband & I each have our own credit cards. Mine is through BOA & I have had it for about 6 years, it was my first/only credit card & I got it at the ripe old age of 20. Husband is the exact same; 6 years, first/only card, age 20 when received it, only his is through Navy Federal. We have a small balance on mine (approx $1000) & plan on paying it off mid Feb with our next paycheck. The limit on mine is over $7000 & the limit on his is pushing $5000. We don't need this much open credit. We use his on a daily basis for all purchases then pay off when we get paid, there is very rarely a balance carried on it, I'd say $250 at the most. I want to lower my credit limit to around $3000 & do the same for his. Will this hurt our credit scores? We have no plans on purchasing anything big in the next few months, perhaps a motorcycle with a loan through Navy Federal, but no home purchases. Our credit scores, when last checked in October, were in the 700's. We are just looking for advice on what to do. Thanks.

Re: Lowering Limit on Credit Card

REgnlor — Fri, 30 Jan 2009 22:17:38 GMT

Rhea, decent credit limits are getting harder to come by these days so I for one would definitely NOT self lower any of my limits. There are many of us here who have been victims of the credit crisis and received decreases on credit lines or worse yet credit card closures. Your scores are great but even some here with nearly 800s have received decreases. It would also have a negative effect on your utilization which could decrease your FICO scores. Heck, if anything I'd ask Navy for an increase because you just never can tell what will happen from one point to the next.

Re: Lowering Limit on Credit Card

oracles — Fri, 30 Jan 2009 22:21:47 GMT

Hi Rhea and welcome to the forums

DONT YOU DARE TOUCH THOSE CREDIT LIMITS!!!!!!! lol

It will indeed hurt your score due to util%. I know you state you rarely carry a balance but the day you do your util% will increase and then your scores will decrease.

Also, you never know what the future will bring. If an emergency should every happen and you need that available credit, you have just put yourself in a difficult position.

Now lets just say that you do have enough credit to cover the emergency, your util% will increase and your score will decrease.

Honestly, i think this is a perfect opportunity to get one more credit card and 1 store/gas card. (both of you)

The mix of credit actually gives you extra points.

Because your spouse has a Navy federal card, you yourself should join and also recieve a card.

They are great with their credit cards and will grow with you.

Always plan for the future, so you are always in a sound position should anything arise.

What you are proposing will actually hurt you.

Hope this helps

Re: Lowering Limit on Credit Card

KingAdrock — Fri, 30 Jan 2009 23:10:30 GMT

Welcome to the forums, Rhea.

While you can call and ask for a decrease, this is a poor idea. Lowering your limit would cause your utilization % will go up and your FICO to go down. Sure you may not need high credit limits, but they aren't harming you. They're helping you. Situations where CLD is benificial are very rare.

Re: Lowering Limit on Credit Card

Anonymous — Fri, 30 Jan 2009 23:59:36 GMT

I am an authorized user on his card & he is on mine as well. How many cards essentially should we have? We currently each have one. We also have 2 car loans & every so often take out a small consumer loan through Navy Fed & pay it off with in 6 months. We are debating a motorcycle, so a motorcycle loan, instead of paying cash. I don't want TOO many credit cards. I have seen too many family members get into trouble with credit cards & I don't want to be one of them. We rarely use my card, but had my BIL living with us for a few months & instead of pulling out of what we save/invest we used the card to pay his bills.

Re: Lowering Limit on Credit Card

Anonymous — Sat, 31 Jan 2009 00:22:49 GMT

If you want to maximize your FICO score, you should add one store card (a card without visa/mastercard/amex/discover logo). And add at least one other credit card. You would need to keep it active as well so that it doesnt get closed, perhaps put a reoccurring bill on it. And you can put it in a glass of water, and put that in the freezer so that you resist the urge to use it. =)

Good luck!

Re: Lowering Limit on Credit Card

oracles — Sat, 31 Jan 2009 01:19:05 GMT

@Anonymous wrote:
I am an authorized user on his card & he is on mine as well. How many cards essentially should we have? We currently each have one. We also have 2 car loans & every so often take out a small consumer loan through Navy Fed & pay it off with in 6 months. We are debating a motorcycle, so a motorcycle loan, instead of paying cash. I don't want TOO many credit cards. I have seen too many family members get into trouble with credit cards & I don't want to be one of them. We rarely use my card, but had my BIL living with us for a few months & instead of pulling out of what we save/invest we used the card to pay his bills.

Hi Rhea,

Like i said in my previous post,

Honestly, i think this is a perfect opportunity to get one more credit card and 1 store/gas card. (both of you)

Re: Lowering Limit on Credit Card

smallfry — Sat, 31 Jan 2009 01:33:53 GMT

I just got my NFCU credit limit lowered from 40 to 25 but that was only a scoring rejigger for my TU. I wouldn't dream of asking for a lower credit limit on the cards the OP mentioned.

Re: Lowering Limit on Credit Card

wmarat — Sat, 31 Jan 2009 02:06:24 GMT

Out of curiousity, how did you get an idea to lower your CL's

Re: Lowering Limit on Credit Card

oracles — Sat, 31 Jan 2009 02:20:33 GMT

@wmarat wrote:
Out of curiousity, how did you get an idea to lower your CL's

Wmarat sh stated in her previous post

" I don't want TOO many credit cards. I have seen too many family members get into trouble with credit cards & I don't want to be one of them."

I guess it can also mean too much credit.

Message Edited by oracles on 01-30-2009 09:20 PM

Re: Lowering Limit on Credit Card

Anonymous — Sat, 31 Jan 2009 03:56:21 GMT

I got the idea because we never use it & I thought too much open credit would hurt our score, apparently $12,000+ isn't too much. We don't have an issue with credit cards, no enormous CC debt or anything. I will talk to DH about getting another card(s). I know we are approved through USAA for up to $3,500. So that may be an option. Ideally, what is being said is we should each have 3 credit cards, so 6 in total. That seems like a crazy amount to me, but hey, what do I know?

Re: Lowering Limit on Credit Card

wmarat — Sat, 31 Jan 2009 04:07:44 GMT

1. 12k is not much credit.

2. You and DH have had one card each for 6 years, your scores are 700+, are you sure you need more CC.

3. If you decide to go for an additional CC, think it over. What card you need, kind of rewards, lenders' reliability, APR's etc. There are plenty of good cards, just research and choose wisely.

Good Luck.

Re: Lowering Limit on Credit Card

oracles — Sat, 31 Jan 2009 04:13:06 GMT

And to add to what wmarat stated,

again, i think you should get another cc but also another store.

Make sure the store card is a store that you shop at. You will have to use it at least once every 5-6 months to keep it active. Nothing like forcing yourself to buy from a store you really dont like or shop at.

Re: Lowering Limit on Credit Card

Anonymous — Sat, 31 Jan 2009 04:25:38 GMT

Rhea187 wrote:
I will talk to DH about getting another card(s). I know we are approved through USAA for up to $3,500.

USAA would be an outstanding choice. OUTSTANDING.

Both my first credit card and first mortgage were through them, and I now have at least ten accounts with them for a wide variety of their services. I also have mortgages, cards, and other financial accounts with many other banks, and I can say that, hands down, USAA is one amazing company to do business with. Getting a card from them will open the door to many other valuable opportunities as your new relationship with them grows.

(Edited to add relevant quote from Rhea187)

Message Edited by annointedWRX on 01-30-2009 11:25 PM

Re: Lowering Limit on Credit Card

Anonymous — Sat, 31 Jan 2009 04:46:01 GMT

Rhea187 wrote:
I don't want TOO many credit cards. I have seen too many family members get into trouble with credit cards & I don't want to be one of them. We rarely use my card, but had my BIL living with us for a few months & instead of pulling out of what we save/invest we used the card to pay his bills.

Getting into trouble with credit cards usually doesn't "just happen" to folks. More often, they make irresponsible decisions with credit, which leads to their troubles.

You and your husband look like you have a good understanding and healthy abhorrence of credit card debt and the importance of saving. Remember, having high limits is not a bad thing; it demonstrates that you're responsible enough to be entrusted with credit. Having high balances that charge interest is what's bad. To put it another way, paying interest is the enemy of financial well-being, not having high limits. Sounds like, despite your good intentions, you were on the verge of "throwing out the baby with the bathwater." There are so many helpful people and posts on this forum, so if you're like me, you'll probably find you learn something new every time you log in!

Message Edited by annointedWRX on 01-30-2009 11:46 PM

Re: Lowering Limit on Credit Card

Anonymous — Sat, 31 Jan 2009 16:00:50 GMT

OP's thought that she might get into trouble with credit is an insult to people who actually do. I you are worried about getting into trouble before you do, and you are willing to take steps like posting here, calling up the CC company to lower your limits, put any thought into it at all, then you won't get into trouble.

I would go the other way and start making some money with your history. Start app'ing for something that will pay you some rewards to do so. Or look for some 0% BT's or APRs. Lets go now.

Re: Lowering Limit on Credit Card

Anonymous — Sat, 31 Jan 2009 17:36:35 GMT

I guess it wouldn't be good to mention HOW MUCH I HATE USAA. We were in a car accident in the middle of a PCS in September. It took them 7 weeks just to actually total the car. It wasn't our fault but since we were in the middle of traveling we had no choice. Here we are 4 months later & they are just now realizing in order to sell the car at auction they need a copy of our driver's license? They are on my hit list right now. The banking side, hopefully, is better.

Re: Lowering Limit on Credit Card

haulingthescoreup — Sat, 31 Jan 2009 17:51:52 GMT

CreditCardWhore wrote:

OP's thought that she might get into trouble with credit is an insult to people who actually do...

That's a pretty strong statement, and a bit of an insult in itself.

Let's please remember to keep the forums a supportive place for members, especially the newbies!

* * * * * * * * * * * * * * * * * * * *

OP, it's not how many cards you and your husband have together; it's how many you have individually. Your credit is separate from his, and vice versa.

One smart thing to do with extra cards is to put a monthly recurring charge on each (cell phone bill, internet bill, charitable donation, etc.) but put the physical card away. We call this sock-drawering your cards. The recurring charge will keep it alive, and it's money you were spending anyway. If you are worried that you might be tempted to overuse the cards, having them physically out of your wallets will help avoid that. You sound like you have it together, and I wouldn't expect you to go wild.

You can also make your cards work for you. Nowadays I don't bother with a card unless I get rewards back from it, preferably cash back rather than points. If you pay promptly, never carrying a balance, you wind up making money. Some cards, like PenFed (Pentagon Federal Credit Union) have great rewards --the PenFed Plat Visa credits back 5% of gas, 2% of grocery, and 1.25% of other purchases onto your statement every month.

Bank of America, Navy, and USAA are perfect cards for those who don't want to have a zillion cards to keep track of. You should definitely get in with USAA. I'm not eligible for Navy, and so USAA is pretty much my go-to financial organization. And as I mentioned above, PenFed has a fantastic cash rewards card. They can be tough to get, but with six years of clean history, you might well be there.

If a lot of available credit makes you uneasy, that's one thing. But there is no such thing as "too much credit," in terms of scoring or anything else. A very few mortgage lenders get twitchy at the sight of lots and lots of CC's and request that some be closed before issuing a mortgage, but three cards with a total of $20-$25K would not be an issue at all. And there's sort of a halo effect with credit --the more that you have been trusted by other lenders, the more likely a new one is to be the same.

eta: whoops, just saw your post about your unhappy experience with USAA auto insurance! Anyway, I have nothing but good to say about their banking, credit, and investment people. Hope you get your claim settled soon!

Message Edited by haulingthescoreup on 01-31-2009 09:51 AM