topic Re: What is the purpose of a 100k limit on a credit card? in Credit Cards

What is the purpose of a 100k limit on a credit card?

jamesdwi — Sun, 19 Aug 2012 02:41:19 GMT

I see people with these huge limit credit cards. What exactly does it get you if you aren’t Bill Gates or some celebrity, I understand if it’s a business with huge limits that’s one thing but everyday people brining home less than 200k a year. Even if you had an excellent rate of 5.9% APR and you charged just 30% of your CL with a 100k CL card your minimum payment would be $1200 a month for the next 27 months even if you don’t track the minimum payment. I make good money and all, but $1200 is more than my weekly take home pay. 25% of my net monthly pay would still have me paying on the bill for more than 2 years and have paid over $2089 in interest. We won’t even discuss how long it would take to pay if off if you get the penalty APR. I guess some single IT people have 30k in the bank for that special purchase but I bet less than 1% of these high limit cards see more than 10% UTL max all year.

The whole putting cars and down payments on cards has been discussed here but I would think that is far from the norm for most people and if it’s just for the points, I would think the dealer would rather give you a 2% discount in cash and not have to run the visa signature card or your AMEX charge card with a 3.5% swipe fee for 50k

In general these cards just sound like a recipe for disaster. Of course it compounds with high limits breed high limits.

Re: What is the purpose of a 100k limit on a credit card?

jsucool76 — Sun, 19 Aug 2012 03:50:18 GMT

A limit that high is only breeds disaster with an irresponsible card holder. Most people on these forums are pretty responsible, responsible enough to come here and research everything / get advice about cards and their situations at least.

A CL that high is useful for utilzation at least, and some people use their personal cards for business expenses and then get reimbursed by the company later. I mean wouldn't you love a 100k limit just for S&Gs? Doesn't mean you need to spend all of it at once :-)

Re: What is the purpose of a 100k limit on a credit card?

Ron6262 — Sun, 19 Aug 2012 03:54:36 GMT

I have worked at 2 dealerships in Sales/Finance, both had a 2K limit on CC towards purchases. We would occasionaly have the person with a AMEX or whatever want to put a car or motorcycle on his card, we would tell them 2K max on the card and that is it. No way a dealership is paying a 3.5 fee for a large purchase unless they are marking it up and charging it back to the buyer.

Re: What is the purpose of a 100k limit on a credit card?

Anonymous — Sun, 19 Aug 2012 03:57:46 GMT

I have a card with 100k limit. Kind of unique circumstance as it is palladium card. Could have asked for even higher limit. Just picked that number as I occasionally have some large expenses but no where near 100k but I didn't want to deal with asking for higher limit at some other point in time and 100k seemed like nice round number. I don't think you see many normal credit cards with 100k. Fact is cards over a certain limit don't even count for revolving utilization. Anyone with really high limits likely knows how to handle credit. Generally speaking I want limits that make my revolving utiL low even when I am using them.

Re: What is the purpose of a 100k limit on a credit card?

Anonymous — Sun, 19 Aug 2012 03:58:49 GMT

@Ron6262 wrote:
I have worked at 2 dealerships in Sales/Finance, both had a 2K limit on CC towards purchases. We would occasionaly have the person with a AMEX or whatever want to put a car or motorcycle on his card, we would tell them 2K max on the card and that is it. No way a dealership is paying a 3.5 fee for a large purchase unless they are marking it up and charging it back to the buyer.

lots of other places to spend 30-50k. Think jewelry.

Re: What is the purpose of a 100k limit on a credit card?

CK_Charles_Lover — Sun, 19 Aug 2012 05:59:17 GMT

I'm sure most don't need a CL of 100K, but if you think about it most people in here like to keep UTIL under 10%. So if you only had 1 card (a stretch I know) and spent 10K on it you would be at 10%. Lots of people spend 10K, heck a family vacation or trip to Europe could do that.

Re: What is the purpose of a 100k limit on a credit card?

Smug — Sun, 19 Aug 2012 08:41:00 GMT

@Anonymous wrote:
@Ron6262 wrote:
I have worked at 2 dealerships in Sales/Finance, both had a 2K limit on CC towards purchases. We would occasionaly have the person with a AMEX or whatever want to put a car or motorcycle on his card, we would tell them 2K max on the card and that is it. No way a dealership is paying a 3.5 fee for a large purchase unless they are marking it up and charging it back to the buyer.
lots of other places to spend 30-50k. Think jewelry.

What a waste.... Jewelry......lol

Re: What is the purpose of a 100k limit on a credit card?

CreditScholar — Sun, 19 Aug 2012 09:51:13 GMT

It's possible to use a lot of that credit limit, depending on your circumstances. Every December I'll charge about 50k, with 30k of that being an insurance policy for my fiancee's ring. With other holiday expenses, it starts to add up quickly. I agree with previous posters though - if you have a CL that high, odds are you know how to handle credit. Banks aren't stupid. They don't give out CLs that high to people who don't have the assets to back it up.

Re: What is the purpose of a 100k limit on a credit card?

CreditScholar — Sun, 19 Aug 2012 09:53:37 GMT

@Smug wrote:
@Anonymous wrote:
@Ron6262 wrote:
I have worked at 2 dealerships in Sales/Finance, both had a 2K limit on CC towards purchases. We would occasionaly have the person with a AMEX or whatever want to put a car or motorcycle on his card, we would tell them 2K max on the card and that is it. No way a dealership is paying a 3.5 fee for a large purchase unless they are marking it up and charging it back to the buyer.
lots of other places to spend 30-50k. Think jewelry.
What a waste.... Jewelry......lol

It's not always a waste. Sometimes jewelry can appreciate in value quite quickly. In other cases they can serve as an excellent hedge against inflation/market turmoil in the same way gold and other hard assets do.

Re: What is the purpose of a 100k limit on a credit card?

Cdnewmanpac — Sun, 19 Aug 2012 12:46:22 GMT

@CreditScholar wrote:

It's not always a waste. Sometimes jewelry can appreciate in value quite quickly. In other cases they can serve as an excellent hedge against inflation/market turmoil in the same way gold and other hard assets do.

At least that is what your fiancée with the ring that requires a 30k annual insurance premium keeps telling you

Seriously, my father in law makes frequent trips to the middle east for consulting work, often with little advanced notice. He once told me he spends upward of 30k/month on airfare alone. Since reimbursement often takes more than a month, he carries some high balances.Having a high limit card keeps him under 30% utilization, which he has chosen as a "safe" amount. He has several million in assets under management with the issuer's bank, as I believe is fairly typical for people with high limit cards.

Re: What is the purpose of a 100k limit on a credit card?

CreditScholar — Sun, 19 Aug 2012 13:13:21 GMT

@Cdnewmanpac wrote:
@CreditScholar wrote:

It's not always a waste. Sometimes jewelry can appreciate in value quite quickly. In other cases they can serve as an excellent hedge against inflation/market turmoil in the same way gold and other hard assets do.
At least that is what your fiancée with the ring that requires a 30k annual insurance premium keeps telling you
Seriously, my father in law makes frequent trips to the middle east for consulting work, often with little advanced notice. He once told me he spends upward of 30k/month on airfare alone. Since reimbursement often takes more than a month, he carries some high balances.Having a high limit card keeps him under 30% utilization, which he has chosen as a "safe" amount. He has several million in assets under management with the issuer's bank, as I believe is fairly typical for people with high limit cards.

Actually that ring was my father's idea and a complete surprise to her. There is no way I could afford such a thing on what we make. We can handle the annual insurance premium, but the purchase price was well beyond our reach. He took care of that part.

Re: What is the purpose of a 100k limit on a credit card?

Anonymous — Sun, 19 Aug 2012 14:31:45 GMT

It's true that most people have no real use for a $100K limit card. I have enough credit now to easily cover my monthly expenses and with a lot of that on a charge card I don't even have to worry about utilization. If for some reason a bank offered me a $100K limit card, it really wouldn't do anything for me, I honestly think I would refuse it. That being said, I would think that if a bank is offering someone a card with a $100K limit, that person is very responsible with money and probably has lots of assets with that bank. He probably also has a need for a high limit like that, because atleast some months he needs to charge a lot of money for whatever reason.

Re: What is the purpose of a 100k limit on a credit card?

Open123 — Sun, 19 Aug 2012 15:31:01 GMT

For a business, $100k is a pretty modest credit line. Many businesses will have annual insurance premiums (property, e&o, gen liability, etc...) in $50k - $100k range. The commercial general liability for doctors, hedge funds, and law firms are just insanely high.

For personal spending, I can see where $100k is kind of high. But, even personal insurance (property, auto, umbrella, personal article floaters for valuables, endorsements, etc...) can all easily add up to around $25k - $30k annually. I'd rather charge it annually or semi than spread out payments with added fees. Unless one has a very large CL, this is where I appreciate Amex's charge card where one can just charge it without a second thought to utility.

Re: What is the purpose of a 100k limit on a credit card?

Roarmeister — Sun, 19 Aug 2012 17:40:43 GMT

$100k CL? Wow, it must have take a lot of CLIs to get a limit that high. I know there are also some cards out there that have no limits. Must be for the rich and famous!

That said, to get that kind of CL then you have to demonstrate responsible behaviour in the first place and the ability to pay. I suppose if I had a card with that type of limit AND used it for transactions near the max, I would have the resources to back it up and pay it off quickly too. No min. payments users need apply here.

All that said, I do have 5 cards and most are high CLs. 2 @ 20k, 15k, 10k, 6k. That's a total of 71k. My current debt is 7k (after a couple large purchases and recent vacation) and I consider myself "maxed" to my ability to pay at 1.5k per month. I will never use my CL. But having the headroom so that my utilization rates stay low is the primary reason for high CLs.

Re: What is the purpose of a 100k limit on a credit card?

jamesdwi — Sun, 19 Aug 2012 17:50:08 GMT

@Roarmeister wrote:
$100k CL? Wow, it must have take a lot of CLIs to get a limit that high. I know there are also some cards out there that have no limits. Must be for the rich and famous!
That said, to get that kind of CL then you have to demonstrate responsible behaviour in the first place and the ability to pay. I suppose if I had a card with that type of limit AND used it for transactions near the max, I would have the resources to back it up and pay it off quickly too. No min. payments users need apply here.

@Anonymous that said, I do have 5 cards and most are high CLs. 2 @ 20k, 15k, 10k, 6k. That's a total of 71k. My current debt is 7k (after a couple large purchases and recent vacation) and I consider myself "maxed" to my ability to pay at 1.5k per month. I will never use my CL. But having the headroom so that my utilization rates stay low is the primary reason for high CLs.

With a 100k CL you don't even need to do a transaction that would raise any flags at all to the lender or FICO, a charge of 30% of your CL is enough to put you in a bad place if you had a life issue pop up that took away your employment for a few months.

Re: What is the purpose of a 100k limit on a credit card?

Jlu — Sun, 19 Aug 2012 17:52:01 GMT

In my professional life I own and run a car dealership. Lately we are running more vehicle purchases through our credit card machine than during the great real estate bubble of 2004-2007. This is disturbing to me, but we are making enough on the cars to be able to afford a 2.5% (this is our rate) hit as it's a convienence to our customers and adds up to more sales. We advertise credit cards in our marketing so we make up for the 2.5% with increased sales. Many times when we know it's a cash back card we will split the rewards with the customer so they pay 1% to us if they get back 2% cash back. I just recently ran a Mercedes Coupe at $26,000 through our credit card machine and it was an AMEX Platinum. Approved, no problem. The customer told me the only reason he was doing this was because he wanted to be qualified for a Centurion card - I said, good luck!

However most customers just don't have the money to afford a car and can't get a loan for what ever reason - this is scary.

Re: What is the purpose of a 100k limit on a credit card?

cashnocredit — Sun, 19 Aug 2012 18:55:04 GMT

Very few holders of a 100k cc would carry a balance. However, that sort of limit lets one go on high end vacations and not worry about spreading expenses out amongst CCs. Also, high end luxury items.

Costco does weird, high end sales from time to time. Last year they had a diamond ring on sale (one of a kind) for just under 500k. They often carry pricey stuff in smallish or even single qtys. The most I've indulged lux stuff at Costco was a 2k bottle of 100 y/o port.

Re: What is the purpose of a 100k limit on a credit card?

emptypockets — Mon, 20 Aug 2012 01:30:47 GMT

I was reading on one forum (I forget where) that some people witho limits like this have reallocated limits from cards they closed in the past. They may never plan to use the limit. People sometimes open cards for the bonuses, then close them when the AF hits. Before they close them, they reallocate the available credit to another card (same issuer).That way your Util is not affected by closing cards, because your available credit remains the same. Then later, when or if you decide toopen another card with that issuer, and they give you a smaller limit than you want, you can reallocate some of your avail credit to the new card. Lots of people do this with Chase, Or Citi for example.

Re: What is the purpose of a 100k limit on a credit card?

jsucool76 — Mon, 20 Aug 2012 01:32:48 GMT

@emptypockets wrote:
I was reading on one forum (I forget where) that some people witho limits like this have reallocated limits from cards they closed in the past. They may never plan to use the limit. People sometimes open cards for the bonuses, then close them when the AF hits. Before they close them, they reallocate the available credit to another card (same issuer).That way your Util is not affected by closing cards, because your available credit remains the same. Then later, when or if you decide toopen another card with that issuer, and they give you a smaller limit than you want, you can reallocate some of your avail credit to the new card. Lots of people do this with Chase, Or Citi for example.

Definitely a possibility. I didn't even think of that when I responded to this thread

Re: What is the purpose of a 100k limit on a credit card?

iMacDrew — Mon, 20 Aug 2012 01:36:50 GMT

@emptypockets wrote:
I was reading on one forum (I forget where) that some people witho limits like this have reallocated limits from cards they closed in the past. They may never plan to use the limit. People sometimes open cards for the bonuses, then close them when the AF hits. Before they close them, they reallocate the available credit to another card (same issuer).That way your Util is not affected by closing cards, because your available credit remains the same. Then later, when or if you decide toopen another card with that issuer, and they give you a smaller limit than you want, you can reallocate some of your avail credit to the new card. Lots of people do this with Chase, Or Citi for example.

That sounds like a great idea actually. I may try this with chase sometime next year.