topic Re: CC's with ridiculous limits...why?! in Credit Cards

CC's with ridiculous limits...why?!

jdirilo — Sat, 30 Mar 2013 05:25:02 GMT

Just trying to better understand this credit game, that's all. When I see people post that they have total credit limits of $20k, 30k, 50k, etc, I can't help but wonder...what do you do with it all?! Obviously most of you have a decent income and aren't using your cc to pay monthly bills, or are you? If you have 5-10 cards with high limits, how are you using these each month? Gas or food? Flights? Business? Just curious because my highest cc is $2500, and I just don't see how anything higher than that would benefit my credit other than overall util and limit. What am I missing here? Please be gentle!

Re: CC's with ridiculous limits...why?!

Open123 — Sat, 30 Mar 2013 05:29:32 GMT

For business, I find high limits extremely valuable for such things as quarterly tax payments, travel & dining, paying vendors and capital expenditures.

For personal use, $20K is really all I need, since my monthly charges are never very high, unless it's the Christmas season.

Mostly, for very high one time charges, I'll just use a charge card and not worry about the static limits.

Re: CC's with ridiculous limits...why?!

Anonymous — Sat, 30 Mar 2013 05:30:14 GMT

The higher your limits the more you can spend while still staying at a low utilization

Re: CC's with ridiculous limits...why?!

09Lexie — Sat, 30 Mar 2013 05:33:15 GMT

Overall util definitely helps with my credit score. No, I don't use anywhere near my CL. I rotate my cc's unless there are specific purchases that can benefit me.

Re: CC's with ridiculous limits...why?!

Anonymous — Sat, 30 Mar 2013 05:35:23 GMT

I use certain cards for specific monthly expenses BUT I always PIF.

Things each month that get put on a card then paid off right away:

Cell Phone

Electric bill

Gas bill

Cable bill

Groceries (Going to be exclusively on my BCP)

The trick is never allowing any of these or other bills to escape being PIF. Its a reward thing actually. Why pay cash when I can grab reward dollars, points or miles? I am just 100% set in stone about paying them off before the statements close. No ands ifs or buts.

But to answer your question OP, the high limits permit higher usage while holding a lower util. they also tend to attract other higher limits.

Re: CC's with ridiculous limits...why?!

jdirilo — Sat, 30 Mar 2013 05:35:09 GMT

PSouz, I understand that part. But I guess what I am wondering is what people "spend" that much money on each month?! Maybe its too personal of a question, which I don't mean it to be. Just trying to grasp the whole concept of having cc's since I only have a few and I want to make sure I am using them wisely. I spend a lot on food and gas. And of course, "shopping" too. But I think $2500 is plenty credit for me(total cc limits are $3500) I can't imagine how people manage to stay well under their $25000 cc limit! For me that would just be too much temptation.

Re: CC's with ridiculous limits...why?!

jdirilo — Sat, 30 Mar 2013 05:37:33 GMT

That's another thing I need to be educated about. Once I reach prime card status(not for awhile) how do you know which is better? I have never used my rewards points with nfcu, it doesn't seem worth it to me. I couldn't differentiate between all the prime cards and their benefits, I don't have a clue what ill app for when my scores are high enough.

Re: CC's with ridiculous limits...why?!

Anonymous — Sat, 30 Mar 2013 05:39:25 GMT

I'm not sure if its true, but I just feel that having higher limits looks better to future lenders, I got my bce with a limit of 7600, way more than I needed, but still made sure to request a CLI on day 61 and got it up to 14k, I will never use even close to that. But honestly I think its kind of cool to have a limit that high at my age. And I dont have to worry about my utilization because the most I spend in a month on all my cards combined is 1000

Re: CC's with ridiculous limits...why?!

Open123 — Sat, 30 Mar 2013 05:39:39 GMT

@jdirilo wrote:

I can't imagine how people manage to stay well under their $25000 cc limit! For me that would just be too much temptation.

Not if you know you have to pay it back! Regardless of how high CLs one has, it isn't money, but credit that has to be repaid.

Credit is just temprorary purchasing power (that can disappear at a moment's notice) that has to be repaid. Having high CLs isn't about using it, but spending comfortably without worry about hitting the limit or high utility reporting.

Re: CC's with ridiculous limits...why?!

Anonymous — Sat, 30 Mar 2013 05:41:24 GMT

@Anonymous wrote:
The higher your limits the more you can spend while still staying at a low utilization

This. I put most of my monthly expenses on my cards and end up with 3-5% util when the statement cuts. I just PIF right after. Having higher limits is convenient b/c I don't have to worry about being close to my limit or paying multiple times each billing period.

Re: CC's with ridiculous limits...why?!

jdirilo — Sat, 30 Mar 2013 05:45:44 GMT

Well thanks for explaining I figured it was for overall util but I think I understand it fully now. It's more "comfortable" persay? I guess it makes sense. If I had a $10000 limit, my util would drop a ton and my score would sky rocket. Well, once I get these cards PIF I will! I am in between jobs right now, which is why I've been using my cards frequently for everyday purchases. Once I'm working again, I will pay them off right away, at least the highest interest one which I think is cap one.

Re: CC's with ridiculous limits...why?!

Anonymous — Sat, 30 Mar 2013 06:46:50 GMT

My total credit isn't as high as most here. It's $7K total. But my reasoning is a little different. I want to buy a house in a couple of years and want to build up decent lines for emergency use. I.e. If right after I move in, the ac and plumbing go out. My thought is I don't want to have to stress about something like that. Hopefully I'd have cash, but if not I want to be able to deal with potentially pricey emergencies.

Re: CC's with ridiculous limits...why?!

oscar_actuary — Sat, 30 Mar 2013 07:30:34 GMT

long post.... sorry got carried away. cheers.

I'll offer a slightly different perspective because I'm a dumb redneck from Alabama. Ok, maybe not all of that is true. I got the high CL, not by design.
2001: Got a BofA card in order to transfer 8% Car Loan to 0%. I don’t recall the initial limit but I think it was over 10k, now its 17.6k. I never asked for a raise.
Some time between 2002 and 2008 acquired Sams Club Discover (for the 2% CashBack, once you hit 10k, and I was already paying to be a member), and a Chase Card which has since been converted to Freedom. The Same Club started around 5k and is now 10k. Freedom is now 16.6k and started around 10-12k.. Gosh, I really didn't keep track. Back then I really only used them to transfer other debts and put some items on Sams

Then starting in 2009 we really went crazy trying to earn CB on Sams Club.
We added Amazon Visa (Chase) for the rewards on Amazon purchases. I've only recently noticed they pay 3% CB on groceries. All this time.
Time after time I threw away offers for other cards. Figuring it never made sense to worry about it when I had the SamsClub Discover for 2% CB.

Then comes 2012, March. And we're tired of the high rates on our 2nd mortgage and frustratingly wanting to refi the 1st/2nd. Then we hear about HARP. Refi the first. It get me thinking, we app for a few cards and transfer the rest of the 2nd Mrtgage to 3 new cards (18k total CL. Discover, Chase Slate, StateFarm Visa) with $0 transfer fee on the first two. So, again, I just got them to take advantage of low interest and dedication to payoff the high 2nd Mortgage/
That gets me up to 67,200, including 2k on a PayPal card (which I grudgingly got because PayPal kept harassing me. And recently realized it also pays 3% on Gas and Restaurants, always. See, I only used the Sams Club for EVERYTHING before this month, pretty much.

Ok, then just this month I started waking up to all these 5% cards, including my own Freedom and Discover Cards and starting checking out this forum. Citi and BofA were both offering cars that gave decent CB and $100 bonus for using them $500 in first 3 mos. Free money is good. (8k and 7.3k CL respectively). Then I start reading about PenFed and 5% gas all the time every time sounded great. Also, CU rates loan rates looked good. 18 month 0% transfer gave possibilities for paying down a 4.95% car loan, if I played it right, $250 max transfer fee. Well, when they said sure, and here is 20k CL, that got us up to $102,500 CL.

For me it had nothing to do with utilization. It started as convenience and debt consolidation at 0% Ditto for getting 3 more in 2012. Ironically, back then I was getting 1/2 the CL per card I get today. Now, I'm interested in CB Rewards (and Discover discount mall is sweet). With the exception of 25-35% utilization while we were paying off the transferred 2nd mrtg, our TB is under 5k and PIF. Honestly, I was a bit flabbergasted to end up with this much avail credit. I realize now its not unusual

My regret is that I was too lax in considering my wife's credit. I think only 1 if any, card is in her name. She does have a couple dept cards.
We haven’t paid interest on CC in at least 25 yrs, possibly ever. Don't worry, I did finance 10k car stereo with IRA money. So, yep. Pretty dumb in past.

If this recent apping hurts our new refi approval, I'll wish I had waited. But, I had no clue we were going to get a call and have an offer to consider worthwhile. So yeah, I sorta seem to luck/fall into some of this. No utilization strategy at work.

Edit for date correction

Re: CC's with ridiculous limits...why?!

UFGuy2006 — Sat, 30 Mar 2013 07:24:02 GMT

@09Lexie wrote:
Overall util definitely helps with my credit score. No, I don't use anywhere near my CL. I rotate my cc's unless there are specific purchases that can benefit me.

Agree here. I have some pretty high limits aquired over the years... but I definitely do not use them. Its a nice to have I guess...

Re: CC's with ridiculous limits...why?!

zeusta20 — Sat, 30 Mar 2013 07:35:59 GMT

My total CL is 23.2k. I wish it was higher, but in due time. Just like everybody said on here, it def helps with UTL. Its also pretty cool to have and it also gives you that peace of mind. Putting everything aside, sometimes it just HAPPENS. Based off of your credit score, income, etc. Sometimes the CC company wil just give you a high limit because of how you manage your debt responsibly in the first place.

For me, one of my big goals, is to save up for a car, use my credit card to purchase it (having the money to back it up of course), and pay off that credit card as if that purchase never happened, BUT, at the same time, I'm earning a sh** load of rewards points.

Re: CC's with ridiculous limits...why?!

boomhower — Sat, 30 Mar 2013 09:22:30 GMT

Utility, utility, and utility. Plus over $5k gets you signature or worldcard status which has it's own benefits.

Re: CC's with ridiculous limits...why?!

L0RDAVENTAD0R — Sat, 30 Mar 2013 09:27:18 GMT

Another reason is people who make a lot spend a lot. This helps when they have high lines of credit.

So someone who spends $5,000 a month & puts it all on their CC gets 60,000 pounds/cashback somewhere while keeping their utilization down if their total credit line is like $50,000 (10%).

Re: CC's with ridiculous limits...why?!

Sevenfeet — Sat, 30 Mar 2013 12:58:30 GMT

The rest of the group is right...high credit limits do wonders for your overall utilization.

But it's not always about that. Take my situation for example. First, my Penfed card's limit was what I asked for to clean up some old debt via balance transfer faster than what I could have paid it otherwise. Second, my Chase Freedom is a special case. Since its interest rate is so low (prime, 3.25%), my wife and I use it like a home equity line of credit to park purchases on it that are outside our normal budget (like paying for summer camp for the kids). Our plan is still to pay it off completely by the end of 2014, but it allows us to use Chase's money at rate completely tolerable for use as a longer term loan.

Sometimes, it's all about flexibility.

Re: CC's with ridiculous limits...why?!

youngandcreditwrthy — Sat, 30 Mar 2013 13:05:43 GMT

I would never use near my $130K+ of avail cred!
Having that much cred increases my overall credit profile and score imo.
It's important to me to have great credit in general and in case of a personal "financial crisis"
Having access to capital is the best/most important thing in a Capitalism oriented economy...
Just my .02.
My bills maybe amount to $200/mo haha

Re: CC's with ridiculous limits...why?!

youngandcreditwrthy — Sat, 30 Mar 2013 13:07:58 GMT

Having a lot of prime cards also makes your creditors more competitive imo as they can see who they're competition is right on your CR ;-)