topic Re: Requesting lower credit limits? in Credit Cards

Requesting lower credit limits?

disdreamin — Fri, 20 Aug 2021 15:52:15 GMT

I wondered how crazy it would be if I contacted my banks and requested lower credit limits on my credit cards. I have a few accounts with Chase and one with AmEx and Citi. I'd like to take advantage of a nice SUB with a new AmEx card some time in the not-too-distant future and was considering requesting my limits on most of my exisiting accounts be lowered but don't know how that might impact future apps.

I don't carry cc balances month to month and usually only have a couple accounts post a statement balance. I'm not overly worried about % utlilization, although every once in a while I don't time payments well and might have a few thousand post - I figure if % util happens to be high for a month it will recover the following month.

Thoughts about this? I'm wondering if there are unintended consequences I haven't considered.

Re: Requesting lower credit limits?

SouthJamaica — Fri, 20 Aug 2021 16:00:02 GMT

@disdreamin wrote:
I wondered how crazy it would be if I contacted my banks and requested lower credit limits on my credit cards. I have a few accounts with Chase and one with AmEx and Citi. I'd like to take advantage of a nice SUB with a new AmEx card some time in the not-too-distant future and was considering requesting my limits on most of my exisiting accounts be lowered but don't know how that might impact future apps.

I don't carry cc balances month to month and usually only have a couple accounts post a statement balance. I'm not overly worried about % utlilization, although every once in a while I don't time payments well and might have a few thousand post - I figure if % util happens to be high for a month it will recover the following month.

Thoughts about this? I'm wondering if there are unintended consequences I haven't considered.

I wouldn't. Big banks like Amex don't mind that you have a lot of available credit. Generally, only credit unions care about that.

Re: Requesting lower credit limits?

MrDisco99 — Fri, 20 Aug 2021 16:17:11 GMT

I know Amex will approve new cards and just transfer credit from an existing account if they think you have too much.

Chase will let you do that on recon.

Re: Requesting lower credit limits?

iced — Fri, 20 Aug 2021 16:18:41 GMT

@MrDisco99 wrote:
I know Amex will approve new cards and just transfer credit from an existing account if they think you have too much.

Chase will let you do that on recon.

Chase will also do it automatically. I know at least one instance of an instant approval where they just picked the person's highest balance card and carved some out of its CL to give to the new card.

Re: Requesting lower credit limits?

disdreamin — Fri, 20 Aug 2021 16:27:37 GMT

I actually had to do reallocation when I opened my CSP, but the strange thing was I carved out $15k from my other limits and they made my limit on the new card $25k. It was very odd.

I'm curious what the rationale against lowering limits is - people are saying not to do it but providing no reason. If I choose to do this I'd be sure leave myself usable limits ($10k-$25k). I'm just not sure what the benefit is of having overly generous lines of credit I could never realistically utilize without being in deep doo-doo. I can't see how lowering the limits a bit could negatively impact me, but like I said maybe there's some angle that I am not aware of.

Re: Requesting lower credit limits?

SouthJamaica — Fri, 20 Aug 2021 16:37:59 GMT

@disdreamin wrote:
I actually had to do reallocation when I opened my CSP, but the strange thing was I carved out $15k from my other limits and they made my limit on the new card $25k. It was very odd.

I'm curious what the rationale against lowering limits is - people are saying not to do it but providing no reason. If I choose to do this I'd be sure leave myself usable limits ($10k-$25k). I'm just not sure what the benefit is of having overly generous lines of credit I could never realistically utilize without being in deep doo-doo. I can't see how lowering the limits a bit could negatively impact me, but like I said maybe there's some angle that I am not aware of.

1. I know of no advantages to doing it.

2. I can think of a few slight disadvantages to doing it:

(a) it removes some utilization cushion

(b) it might lower the floor for starting limits on new cards

Re: Requesting lower credit limits?

disdreamin — Fri, 20 Aug 2021 17:07:51 GMT

@SouthJamaica wrote:
(a) it removes some utilization cushion
(b) it might lower the floor for starting limits on new cards
(c) it might appear to a loan officer as a sign of distress

I'm not at all worried about utilization, as I mentioned. Whether my total available credit is 120k+ or ~100k isn't going to make much of a difference if I happen to allow $3-4k to post occassionally. As far as the floor for new cards, again not too worried about it. If I lowered AmEx I'd go down to $25k from $35k and I'd leave $25k+ on at least two other cards. I'd think those should be enough to keep any new limits reasonable. I'm not talking about turning anything into a toy limit except perhaps one Chase card that has been SD'd for years that I'd be willing to take down to $5k.

The last part - how can a loan officer see the history of credit limits on cards? I wasn't aware this was something they could view, I assumed only the current limit would show, not any history. I guess on the upside I don't plan to apply for any loans in the near future, barring an accident where I'd need to replace one of my vehicles. I can't imagine how slightly lower credit limits could impact that.

Re: Requesting lower credit limits?

Anonymous — Fri, 20 Aug 2021 18:06:02 GMT

There are a few standard scenarios where it makes sense, none of which may apply!

1) Concern about spending. There are some who find available credit a temptation to max out the cards. Reducing CLs can minimize damage.

2) Reaching a limit with an issuer. You have $X CL with issuer Y, and that is the max, but they have just come out with that great card you just have to have. As stated, some issuers will automatically reduce limits to get you the card, but not all of them do, and a proactive CLD may make the process go more smoothly.

3) No eyes on the account. For people who have been using their cards "creatively" you may want to guarantee (as near as possible) an automated acceptance rather than risking a manual review. Doing CLDs (well prior to application) can help this. (ETA: With increasing sophistication of AMEX RAT and similar teams from other issuers, this has probably become less used, as the manual review is no longer the main danger. But in my brief time on the dark side, this was one recommended approach!)

Re: Requesting lower credit limits?

Kforce — Fri, 20 Aug 2021 18:04:22 GMT

Like most credit card advice it comes from personal view and how one uses there cards.

Many on this forum have CC's as a hobby and CL's for some reason seem important. If one wants to take advantage of balance transfer offers CL's are important. If one wan't to use the float and pay last second CL's help utilization and higher CL's are positive.

If one uses CC's like you and I, it is not really important. I have lowered and capped all my cards at $20,000 and a couple were $50,000 prior. Had all at 20k and the last card I got gave me 40k, had to have it lowered. Have purchased many houses, cars etc, and having capped CC limits is not an issue. It seem to also not have much effect on starting limits for me. As long as my limit is at a level where monthly utilization is reasonable and large enough for my largest monthly purchases it is good.

All my cards are lowered and locked, and I have seen no negative actions because of it. If I need a new loan I just would activate "AZEO" with plenty of lead time.

Have not been able to figure what good it is having 5-10 times ones income in a credit product with 18% interest. I must be missing something.

Re: Requesting lower credit limits?

disdreamin — Fri, 20 Aug 2021 18:10:57 GMT

@Anonymous wrote:
There are a few standard scenarios where it makes sense, none of which may apply!

1) Concern about spending. There are some who find available credit a temptation to max out the cards. Reducing CLs can minimize damage.
2) Reaching a limit with an issuer. You have $X CL with issuer Y, and that is the max, but they have just come out with that great card you just have to have. As stated, some issuers will automatically reduce limits to get you the card, but not all of them do, and a proactive CLD may make the process go more smoothly.
3) No eyes on the account. For people who have been using their cards "creatively" you may want to guarantee (as near as possible) an automated acceptance rather than risking a manual review. Doing CLDs (well prior to application) can help this.

Hahaha, yeah I would have to do a lot more than I'm contemplating to minimize damage if temptation took over. #1 definitely does not apply.

The internal limit, I've reached with both AmEx and Chase at one time or another. For AmEx I used to hold two cards and the two combined were ~$50k if I recall. At the time, my income was considerably lower and they balked at CLI without the tax return form (number is escaping me...4506T I think). I declined and stuck with the limits as they were. Anwyays, I dropped one of my AmEx cards - co-branded Delta Plat - because the perks were no longer worthwhile to me. I want to app for the Gold or Platinum in the next few months and am thinking the proactive lowering may help with this.

For Chase, I definitely hit their internal limit when I app'd for CSP and had to move limits around to get it. I wouldn't mind lowering those to get below their radar, although I am not sure it matters.

As far as #3, they are welcome to peruse. I don't anticipate a loan officer reviewing my reports for some time, if ever. I don't foresee a mortgage within the next 8-10 years, and possibly never. I'd like to eventually build and might have to see about a contruction loan I guess.

Thank you for all the feedback on the idea of lowering limits. I think I'll just ponder it a bit and maybe just drop the limit on the SD'd card. For AmEx, I'll look up where I hit the internal limit with them prior to app-ing for a new card just to be sure there's a generous amount of space available.

Re: Requesting lower credit limits?

disdreamin — Fri, 20 Aug 2021 18:18:00 GMT

@Kforce wrote:
If one uses CC's like you and I, it is not really important. I have lowered and capped all my cards at $20,000 and a couple were $50,000 prior. Had all at 20k and the last card I got gave me 40k, had to have it lowered. Have purchased many houses, cars etc, and having capped CC limits is not an issue. It seem to also not have much effect on starting limits for me. As long as my limit is at a level where monthly utilization is reasonable and large enough for my largest monthly purchases it is good.

<snip>

Have not been able to figure what good it is having 5-10 times ones income in a credit product with 18% interest. I must be missing something.

I think you hit the nail on the head. For a short while years ago I was into the "lets see how high this can go" game, but I now look at the available credit and see no real advantage to having an excess of it. I'm not terribly concerned about starting limits with new lenders - my SO opened two new cards this year with a very limited credit history (mostly AU on my accounts) and both SL were $25k+.

I can't even image having 5-10 times my income in credit products, I'm pretty sure banks would balk long before then. I know I would.

Re: Requesting lower credit limits?

Aim_High — Fri, 20 Aug 2021 22:05:28 GMT

I don't think reducing credit limits is totally crazy, @disdreamin. But as others have pointed out, it may be unnecessary in many cases and could have some impacts under certain circumstances.

Ironically, I've been focusing on higher limits on most cards in the past few years, so this is not something I see myself doing any time soon! But I'll be the first to admit that I have a very generous utilization padding on all my cards and could take a haircut on most without harm.

IMO, I'd rather have too much than not enough. As more information about how FICO scores are determined has slowly become available in the past 10-15 years, I learned how much more than just modest utilization could hurt a credit score. It actually made me a little angry since FICO wasn't developed until long after I started using cards and Fair Issac was less straightforward about the score components in early years. So I decided that if that's the game that FICO wants to play, I will play by their "rules."

For many years, I thought I could actually USE my full full credit limit without concern. Now I know that my "real" limit without starting to harm my FICO score (and possibly start lenders to react and balance chase) is only about 9% or less of what my statements show on paper. So for round numbers, I always REMOVE the last number of my credit limit and consider that my real limit. (ie: a $25,000 limit is actually $2500 for practical purposes.) My advice is that if you can do that and still consider your new, lowered limits more than sufficient for your highest anticipated spending on that card, by all means go ahead. If not, I would think twice. It's a lot harder and more time-consuming to add those limits back than to slash them.

Re: Requesting lower credit limits?

RSX — Fri, 20 Aug 2021 21:30:10 GMT

the only time i am aware of someone lowering their limits, was back when Internet ordering was new and there was some fraud going on

i knew a bunch of people that had a CC lowered to $300-$500, and then used that for online ordering only, so that if it got hacked, it wouldnt go very far

but with the fraud alerts and the companies reversing fraudulent charges sometimes in the same day it happened, i dont know of anyone doing this anymore

if you wanted to drop all to $20k, i wouldnt see a problem with that

Re: Requesting lower credit limits?

HeavenOhio — Fri, 20 Aug 2021 21:39:35 GMT

@disdreamin, your limit history is on your credit report. I believe it goes back 24 months on Equifax and Experian and 30 months on TransUnion.

Re: Requesting lower credit limits?

Yankee2 — Sat, 21 Aug 2021 01:11:09 GMT

@disdreamin your not alone, I too have seriously thought about reducing a couple of cards I have.

Funny..... I've done searches on this forum regarding that and lets just say it's not common..

I think the perfect limit is spend never exceeds 20% in the entire life I have the card. I have a couple cards that I only use for bonus catagories that I'll never come close to even 5-10%. Those 2 cards make up 50% of my total CL. I'm not worried about total total utilization since it's normally only 2-3% so if I lose both cards completely it only goes to 4-6%.

There is something to be said about the feeling to have the right amount of credit.

Re: Requesting lower credit limits?

Anonymous — Sat, 21 Aug 2021 01:21:08 GMT

@Aim_High wrote:
I don't think reducing credit limits is totally crazy, @disdreamin. But as others have pointed out, it may be unnecessary in many cases and could have some impacts under certain circumstances.

Ironically, I've been focusing on higher limits on most cards in the past few years, so this is not something I see myself doing any time soon! But I'll be the first to admit that I have a very generous utilization padding on all my cards and could take a haircut on most without harm.

IMO, I'd rather have too much than not enough. As more information about how FICO scores are determined has slowly become available in the past 10-15 years, I learned how much more than just modest utilization could hurt a credit score. It actually made me a little angry since FICO wasn't developed until long after I started using cards and Fair Issac was less straightforward about the score components in early years. So I decided that if that's the game that FICO wants to play, I will play by their "rules."

For many years, I thought I could actually USE my full full credit limit without concern. Now I know that my "real" limit without starting to harm my FICO score (and possibly start lenders to react and balance chase) is only about 9% or less of what my statements show on paper. So for round numbers, I always REMOVE the last number of my credit limit and consider that my real limit. (ie: a $25,000 limit is actually $2500 for practical purposes.) My advice is that if you can do that and still consider your new, lowered limits more than sufficient for your highest anticipated spending on that card, by all means go ahead. If not, I would think twice. It's a lot harder and more time-consuming to add those limits back than to slash them.

This 100%. What's the harm in having "too much" credit? It's not like you're paying interest or fees on the "unused" credit. Much better to have "too much" than to have "too little," and be in the position of possibly being forced to eat multiple HPs to get credit limits raised.

Now, I agree that the "hobby" some myFICOers have, of pushing credit limits to eye-popping levels - that's obviously not something that's at all necessary or even wise from a credit perspective. But putting aside trying to get to $1 million in revolving credit or some other huge figure, I simply don't see any advantage, and some risk, in asking for CLDs.

Re: Requesting lower credit limits?

disdreamin — Sat, 21 Aug 2021 02:09:57 GMT

@RSX wrote:
the only time i am aware of someone lowering their limits, was back when Internet ordering was new and there was some fraud going on
<snip>
but with the fraud alerts and the companies reversing fraudulent charges sometimes in the same day it happened, i dont know of anyone doing this anymore

This is why I use credit cards exclusively for online ordering and don't have a debit card, only ATM cards. Where virtual account numbers are available I utilize them for on-off spend on websites I'm not entirely comfortable with, but other than that I figure if I'm using reputable sites then part of the advantage of using the cards is not assuming the risk.

Re: Requesting lower credit limits?

disdreamin — Sat, 21 Aug 2021 02:12:27 GMT

@HeavenOhio wrote:
@disdreamin, your limit history is on your credit report. I believe it goes back 24 months on Equifax and Experian and 30 months on TransUnion.

Good to know, but I'm not terribly worried about it tbh. If they look and decide that lowering limits makes me look less worthy then they can keep their products/loans/whatever. I can't imagine my current lenders seeing an issue with it. I am curious where this information is located on reports. Do I need to pull directly from the reporting agencies? I can't see that info on the versions that are available through this site.

Re: Requesting lower credit limits?

disdreamin — Sat, 21 Aug 2021 02:19:26 GMT

@Anonymous wrote:
This 100%. What's the harm in having "too much" credit? It's not like you're paying interest or fees on the "unused" credit. Much better to have "too much" than to have "too little," and be in the position of possibly being forced to eat multiple HPs to get credit limits raised.

Now, I agree that the "hobby" some myFICOers have, of pushing credit limits to eye-popping levels - that's obviously not something that's at all necessary or even wise from a credit perspective. But putting aside trying to get to $1 million in revolving credit or some other huge figure, I simply don't see any advantage, and some risk, in asking for CLDs.

The harm in having too much credit is...well, having it. I have dropped the number of cards I hold significantly, by choice. I have pared down the cards over the past 5-6 years to ones I intend to keep long-term. I wasn't traveling as much and that made some of the cards I'd previously found great utility in obsolete to me. Others were with banks I just didn't find agreeable (Disco and Barclay, I'm looking at you).

I've gone through my reports for the highest reported balance over the last couple of years and am taking that into account when deciding on a new limit. Well, at least other than an aberrant $11k balance that happened to post a few years ago when I was traveling, that one I'm ignoring lol.

I think I'll take my chances and change my limits to what I am comfortable with. I realize this may entail risks but I'd be hard-pressed to imagine a scenario where any of the lenders I utilize will come after me for the changes I intend to make. If they do, so be it I guess?

Re: Requesting lower credit limits?

Anonymous — Sat, 21 Aug 2021 03:48:42 GMT

@disdreamin wrote:
@Anonymous wrote:
This 100%. What's the harm in having "too much" credit? It's not like you're paying interest or fees on the "unused" credit. Much better to have "too much" than to have "too little," and be in the position of possibly being forced to eat multiple HPs to get credit limits raised.

Now, I agree that the "hobby" some myFICOers have, of pushing credit limits to eye-popping levels - that's obviously not something that's at all necessary or even wise from a credit perspective. But putting aside trying to get to $1 million in revolving credit or some other huge figure, I simply don't see any advantage, and some risk, in asking for CLDs.
The harm in having too much credit is...well, having it. I have dropped the number of cards I hold significantly, by choice. I have pared down the cards over the past 5-6 years to ones I intend to keep long-term. I wasn't traveling as much and that made some of the cards I'd previously found great utility in obsolete to me. Others were with banks I just didn't find agreeable (Disco and Barclay, I'm looking at you).

I've gone through my reports for the highest reported balance over the last couple of years and am taking that into account when deciding on a new limit. Well, at least other than an aberrant $11k balance that happened to post a few years ago when I was traveling, that one I'm ignoring lol.

I think I'll take my chances and change my limits to what I am comfortable with. I realize this may entail risks but I'd be hard-pressed to imagine a scenario where any of the lenders I utilize will come after me for the changes I intend to make. If they do, so be it I guess?

So you're saying the harm in having "too much" credit is psychological. That's fine, and understandable, but it's not a financial harm.