topic Re: Why so high on the credit limits? in Credit Cards

Why so high on the credit limits?

bfranklin825 — Fri, 21 Jun 2013 12:42:42 GMT

Ok, so I've been around the boards for a while now and I've been seeing a few posts here and there where either the post or the person's signature informs me that this person has something like 100k+ in credit limits with all their cards/LOCs...

My question is: Why does anyone need THAT much credit? Why would I need limits that equal or exceed my yearly salary?

I'm assuming that none of what I saw is business related (I could understand high limits for business activity)... so what gives?

Re: Why so high on the credit limits?

Anonymous — Fri, 21 Jun 2013 12:46:15 GMT

Many reasons:

1. Some people have higher incomes.

2. Possibly business cards, or just personal cards that are used for business expenses, though some lenders may not like that.

3. People trying to pad CL so that their utilization will seem lower that what it ought to be.

4. Banks just trust those individuals, most likely due to their long credit history without any delinquencies.

Re: Why so high on the credit limits?

Anonymous — Fri, 21 Jun 2013 12:46:32 GMT

I don't know about others. I have been trying for CLI (soft pulls when possible) and new cards so that when I DO use credit or take a 0% for 18mo. offer (and actually USE the FREE money for a while) my UTL does not get hit so high and drop my scores.

Re: Why so high on the credit limits?

E150GT — Fri, 21 Jun 2013 12:52:21 GMT

I dont need a high credit limit really beyond 5k so thats all I strive to get them to or close to.

Re: Why so high on the credit limits?

bfranklin825 — Fri, 21 Jun 2013 13:06:33 GMT

@Anonymous wrote:
Many reasons:

1. Some people have higher incomes.

2. Possibly business cards, or just personal cards that are used for business expenses, though some lenders may not like that.

3. People trying to pad CL so that their utilization will seem lower that what it ought to be.

4. Banks just trust those individuals, most likely due to their long credit history without any delinquencies.

Well, personally I like high limits on cards that I like to use because I don't want to feel like I'm killing my UTIL when I use them for something, but I just don't understand (outside of business use) why someone would need to charge thosands of dollars at one time. A 20k limit on 4 or 5 cards seems like major overkill to me.

One of your reasons wasn't status... do you think some people like to have extremely high limits because they feel like it is some sort of a status symbol?

Re: Why so high on the credit limits?

Anonymous — Fri, 21 Jun 2013 13:13:26 GMT

Status is a possible reason as well, but a more accurate description would be self-gratification, such as someone finally achieving his own personal milestone. However, no one will know whether a certain individual has a 5k CSP or a 50k CL CSP, unless he goes around advertising it for some reason.

It really boils down to personal spending as well. People with higher income has more spending power and tend to spend more in general. A few thousand dollars in spending, whether it is for clothing or for a meal, may just be considered as normal day-to-day expenses.

Some people are also somehow able to rack up most of their expenses, including rent and other big ticket items, on a credit card as well. So while their income may not be as high, a higher limit will be more beneficial to those individuals

Re: Why so high on the credit limits?

bfranklin825 — Fri, 21 Jun 2013 13:19:07 GMT

@Anonymous wrote:
Status is a possible reason as well, but a more accurate description would be self-gratification, such as someone finally achieving his own personal milestone. However, no one will know whether a certain individual has a 5k CSP or a 50k CL CSP, unless he goes around advertising it for some reason.

I know what you mean my self-gratification... I felt so good when I got my first 15k limit - I really felt like I was starting to "make it" in the credit game. My credit was destroyed in my younger and stupider years. I am so happy to be back to having good credit from the depths that I sunk to after my stupiditiy.

Re: Why so high on the credit limits?

Gunnar419 — Fri, 21 Jun 2013 13:47:04 GMT

@Anonymous wrote:
I don't know about others. I have been trying for CLI (soft pulls when possible) and new cards so that when I DO use credit or take a 0% for 18mo. offer (and actually USE the FREE money for a while) my UTL does not get hit so high and drop my scores.

I'm not one of those with CLs over $100k, but my CLs do exceed my annual income. This recently enabled me to jump on a purchase (fixer house for four figures; I paid cash but used ccs and BTs for part of that) I would otherwise not have been able to make for fear of maxing out cards and making my credit look awful.

Re: Why so high on the credit limits?

Anonymous — Fri, 21 Jun 2013 14:15:46 GMT

I would really like to know how they even got over 50k in a cc......as someone who is starting to watch his credit and not have a single cc over 1000, it baffles me to see some with 50k or 100k in a single cc, then there are those few who have 7 cc with 100k each.......it's like WOW(jaw dropper) but it also give me motivation to get over my hump and pass the 720 score, and try to atleast get a card with 50k lol.......(first step, get a cc to 1k lol)

And is it posible to get a cc that is more than your annual salary?

Re: Why so high on the credit limits?

navigatethis12 — Fri, 21 Jun 2013 14:21:40 GMT

@Anonymous wrote:
I would really like to know how they even got over 50k in a cc......as someone who is starting to watch his credit and not have a single cc over 1000, it baffles me to see some with 50k or 100k in a single cc, then there are those few who have 7 cc with 100k each.......it's like WOW(jaw dropper) but it also give me motivation to get over my hump and pass the 720 score, and try to atleast get a card with 50k lol.......(first step, get a cc to 1k lol)

And is it posible to get a cc that is more than your annual salary?

Some lenders are more loose with credit than others. It's not really that difficult to reach high limits, though. If you have perfect history and low utilisation, you can get up to 25,000 very easily. Most will most likely require some sort of documents for 50,000 or 100,000, so people with those limits must have a higher income.

Most lenders have a certain amount of credit they will give relative to income. Some is 50%, some is 30%, and some is 20%. I reckon if you have a long histor with a lender, they may eventually give you more than your income on a credit card. However, you most likely would need to show assests that can support it and a very long and perfect history.

Re: Why so high on the credit limits?

GatorGuy — Fri, 21 Jun 2013 14:30:03 GMT

Every semester I pay for my wife's tuition on our CC. This expense alone is $11k so imagine what that would do to Util for that month if you didn't have high CL's. And that is considering you don't make any more purchases that month. So it is just because of different usage patterns.

Re: Why so high on the credit limits?

cashnocredit — Fri, 21 Jun 2013 14:39:51 GMT

My cls, now just over 50k, are sufficient for my needs and then some but I didn't have, or use, credit just over 4 years ago. I use my CCs as a convenience and don't carry balances. Since I'm retired carrying balances or going into any kind of debt would be extremely unwise.

My Amex is used for the occasional, very high purchases that would exceed CLs on my other cards. It's possible, even probable, I could use one of my other NPSL cards for these but I really don't know for certain. Credit availability is always uncertain regardless of limits. Still, I am comfortable with the credit I currently have and am not pursuing higher limits

Re: Why so high on the credit limits?

Open123 — Fri, 21 Jun 2013 14:46:01 GMT

bfranklin825 wrote:
My question is: Why does anyone need THAT much credit? Why would I need limits that equal or exceed my yearly salary?

Ah, you really don't, but here are a few reasons where having a CL which exceed's one income may be prudent.

1. To keep your Utility at manageable levels. Let's say, like most of here on myfico, you prefer to keep Utility at 10%. If your montly expenditures are $5K, then you'd need at least $50K in aggregate CLs. Morever, let's say you have a huge fixed bill of $10K, then you'd need $100K to keep it at 10%.

2. Some actually need it CLs above their salary. For example, reimbursable business expenditures for companies which do not issue CCs.

3. Applying for sign-up bonuses which each issuer matching the CLs of prior ones--the higher limits begets higher limits. Over time, the CLs just inflate to easily $100K or above.

Regarding reason #1, I know one can pay before the statement multiple times, but some of us don't want to go through the hassle, just want to pay once with a balance due. For this, large CLs make it possible without hurting utilization.

Re: Why so high on the credit limits?

Anonymous — Fri, 21 Jun 2013 15:59:28 GMT

To keep my utilization low. All my credit cards are set to auto-pay the balance in full on the due date, and I'd rather not deal with having to manually go in and make payments before my statement date.

Re: Why so high on the credit limits?

takeshi74 — Fri, 21 Jun 2013 16:35:04 GMT

@bfranklin825 wrote:

My question is: Why does anyone need THAT much credit? Why would I need limits that equal or exceed my yearly salary?

Needs vary. No one can tell you why you would or wouldn't.

In any case, as stated above, it's not just a matter of "need" but also a matter of maintaining desirable utilization levels. You might want to read up on utilization and how it affects your credit.

Re: Why so high on the credit limits?

scenery_guy — Fri, 21 Jun 2013 16:57:35 GMT

Back before the housing crunch when credit seemed much more available big fat limits were easy. At one point I had a BofA card with a limit of $100,000. Sadly they CLD me out of the blue down to $26,000 but I managed to argue and fight to get it back to $46,000. That was a crush to my ULT at the time, I mean who needs a bunch of cards if you had one reliable card at $100K? My mistake at the time.

Today, for me at least, it takes multiple cards to get to that kind of available credit. I'm actually better than double that old limit now but spread across personal and business cards.

Why so much? It's nice to be able to make large purchase s for home (appliances, furniture etc) and not get anywhere near the limit. For my business sometimes I spend $50K to $100K in one month. I could write a check for it but gathering the miles and points from the card usage is well worth it.