topic Re: Why do people request such high credit limits? in General Credit Topics

Why do people request such high credit limits?

Anonymous — Thu, 04 Oct 2018 19:14:49 GMT

I see lots of people that have multiple credit cards with extremly high credit limits, such as $7,000-10,000.

What is the benefit of having multiple cards and high limits? (besides rewards points/cash back/emergency fund).

(I'm 25 and have a FICO score around 760. I have one Travel Rewards Visa through my Credit Union. My new credit limit is $3,000, which seems ridiculously high to me.)

Re: Why do people request such high credit limits?

Anonymous — Thu, 04 Oct 2018 19:36:18 GMT

For me, it all depends on how I will use the card. For example, if I'm going on a vacation, I don't want a charge in the thousands on a card with only $5k limit. I make sure to keep my usage below 5% on an cards. I also buy groceries for someone else on a designated card so the limit didn't need to be as high as it is. I might not need a $10k limit on cards, but it's good to have the ability to use the card as I'd like to without my spend affecting my score. My income supports it and I always PIF.
Some people don't like high limits on their cards and even seek to decrease them if they're automatically increased. Some people like to go for the highest limit possible just to see how high they can get or because they put a lot of spend on them.
Whatever fits your needs! Imo there's no right or wrong answer as long as you're responsibile with what you've got.

Re: Why do people request such high credit limits?

Anonymous — Thu, 04 Oct 2018 19:49:00 GMT

Responsible users want high limits so they wont have to worry about utilization.

For example i'm rather new to the game and i have to pay sometimes multiple times a month to keep my reported utilization low in case i need to use my scores(so they scores wont decrease due to utilization).

If i had for example a really high limit i'd set auto pay and i'd let it report whatever and still be under 8-9% which is the optimal reported utilization.

Another reason would be to have enough credit to get rewards for a large transaction that might occur once in a while.

Re: Why do people request such high credit limits?

JayTee1 — Thu, 04 Oct 2018 19:49:40 GMT

He asked why people ask for such high limits; I don't think it was a request to brag.

I asked the same question here myself once. There are a lot of reasons -- high limits allow you to spend more while keeping utilization in check is the primary reason for many, and I know it is for me.

Before I qualified for any high limits, I couldn't imagine that I'd ever need a credit card with a $10,000 limit, much less one for $15,000 or $20,000. My tune has changed over the years as my financial situation has changed. It's nice to have cards you can put medical expenses on, or large unanticipated expenses on, without worrying that you've just tapped out your entire credit line.

If you're younger, you don't have kids or a house, and you don't really spend all that much, it may not seem all that useful, especially if you're always paying your balance to zero every month.

Re: Why do people request such high credit limits?

Kree — Thu, 04 Oct 2018 19:52:44 GMT

Last time I went to Hawaii on Business I expensed about 6,000. I flew to Hawaii directly from Indiana where I had about 2,000 expensed.

So even with a 15,000 limit I went over 50% utilization.

My boss's boss flies first and stays at nicer hotels. I've heard that she will spend over 15k in Hawaii when she goes there for a week.

Re: Why do people request such high credit limits?

Anonymous — Thu, 04 Oct 2018 20:10:38 GMT

Thanks for your feedback. That makes sense about why you have higher limits. Life does happen and expenses come up. I requested a small increase last november from $1,000, to $1,500 in case job search was longer than expected. (I was out of work three months and my card along with my savings helped pay all my expenses.)

For me, I am single and have no kids. I am not wealthy and did not grow up in a wealthy family. I try to be wise with my finances and not buy unneccesary things (which is so not easy to do!).

Re: Why do people request such high credit limits?

Anonymous — Thu, 04 Oct 2018 20:18:48 GMT

Good points. I'm new to this as well actually. I didn't know my FICO score until about 3 months ago.

Personally, I requested a credit limit increase from $1,500 to $2,500 a few weeks ago. My credit union gave me a $3,000 limit without doing a hard-inquiry, which has helped drop my utilization ratio.

Re: Why do people request such high credit limits?

Anonymous — Thu, 04 Oct 2018 20:26:57 GMT

@Anonymous wrote:
Good points. I'm new to this as well actually. I didn't know my FICO score until about 3 months ago.

Personally, I requested a credit limit increase from $1,500 to $2,500 a few weeks ago. My credit union gave me a $3,000 limit without doing a hard-inquiry, which has helped drop my utilization ratio.

Hi August. Just an FYI, you can have a total CC utilization of 1-3% and spend $5000 a month on your cards, even with having a total credit limit of $1500. If you are curious how to do that, let us know.

Re: Why do people request such high credit limits?

Anonymous — Thu, 04 Oct 2018 21:37:36 GMT

AugustRush1993: Your score is already very good. It's great that you are asking questions and open to learning. There are quite a few members on here who really know there stuff and their advice can help you plan for where you want to be in your financial future. Here is an article that is extremely helpful. It's for credit rebuilding but I also found it useful to learn about maintaining healthy credit habits.
"ABCD2199's Eleven Rules to Credit Rebuilding"
https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/ABCD2199-s-Eleven-Rules-to-Credit-Rebuilding/td-p/5074148
Another great post is about utilization and how it potentially affects your score.
"The Truth about Credit Card Utilization"
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/The-Truth-about-Credit-Card-Utilization/td-p/5116660
Hope this can help you!

Re: Why do people request such high credit limits?

Anonymous — Fri, 05 Oct 2018 02:05:20 GMT

@Anonymous wrote:
... wont have to worry about utilization.
...
i'd set auto pay and i'd let it report whatever and still be under 8-9% which is the optimal reported utilization.

This.

I autopay in full every month, but I do not want my uitization too high (though I do not consider myself to have high limits.)

My Ducks Unlimited in particular is always over 10% utilization every month on my gas usage. I would love to get it up to 4k-5k limit because then I would be under 9% Utilization every month.

Re: Why do people request such high credit limits?

Hotcoals91 — Sat, 06 Oct 2018 07:24:56 GMT

Higher limits look better on credit inquiries and give more options for other cards and products?

Re: Why do people request such high credit limits?

Anonymous — Sat, 06 Oct 2018 17:29:50 GMT

@Anonymous wrote:
I see lots of people that have multiple credit cards with extremly high credit limits, such as $7,000-10,000.

What is the benefit of having multiple cards and high limits? (besides rewards points/cash back/emergency fund).

(I'm 25 and have a FICO score around 760. I have one Travel Rewards Visa through my Credit Union. My new credit limit is $3,000, which seems ridiculously high to me.)

I've actually have never experienced where I have an option during the application process for me to "request" a specific CL upfront (I have seen this option when requesting for a CLI on an existing account). Though I'm not exactly sure, I believe the CCC reviews the applicant's CS along with the CR and determines based on the existing CC accounts/CLs along with calculated risk factors they come up with the final approved CL for the new card.

In the past my CS was pretty bad due to the financial cliff I fell off of and it was tough to make large purchases without having to use a combo of card and cash. So I gather the higher the CL the better. You get the Rewards (if any) and helps your overall utilization I suppose. And yes with all of the card reward offerings today the initial CL on some cards appear to at least match the bonus spending amount threshold as advertised but not always (ie. spend 1k in 3 mo and get $250 credit statement, so the CL given would be at least 1k).

Great question!

Re: Why do people request such high credit limits?

Anonymous — Mon, 08 Oct 2018 14:59:55 GMT

Thanks for all the feedback everyone, I appreciate your input!

Re: Why do people request such high credit limits?

SouthJamaica — Mon, 08 Oct 2018 18:02:24 GMT

@Anonymous wrote:
I see lots of people that have multiple credit cards with extremly high credit limits, such as $7,000-10,000.

What is the benefit of having multiple cards and high limits? (besides rewards points/cash back/emergency fund).

(I'm 25 and have a FICO score around 760. I have one Travel Rewards Visa through my Credit Union. My new credit limit is $3,000, which seems ridiculously high to me.)

The advantages of having high credit limits are (a) the credit is there if you ever need it, without the need to apply for it and (b) if you allow one or more balances to report, your utilization will be lower if the limits are higher.

I am not aware of any disadvantages of having high credit limits.

Re: Why do people request such high credit limits?

Anonymous — Sun, 14 Oct 2018 13:13:04 GMT

Like bartering start high and both work to a more realistic number. I strive for high limits for a variety of reasons. 1. Higher use still keeps in low utilization % 2. Each card has its own use and rewards so spend accordingly 3. In case of emergency if I can’t sell assets/ get personal loan I can use credit card. 4. Makes the credit portfolio look fat and enticing for better loans and such. 5. Bragging rights. Boa got me a cash rewards card with if I recall start of 7k ( I’ll check exact limit later) with a 200$ of you spend 500 first 3 months. I bought a 800$ taxed competitive pistol with it. 800-200= screaming good deal. I already have the cash to pay it off. I pay it in 5 installments of 2 years 0% interest. Made a tidy profit and looks good for score.

Re: Why do people request such high credit limits?

Thomas_Thumb — Sun, 14 Oct 2018 15:54:45 GMT

@Anonymous wrote:
I see lots of people that have multiple credit cards with extremly high credit limits, such as $7,000-10,000.

What is the benefit of having multiple cards and high limits? (besides rewards points/cash back/emergency fund).

(I'm 25 and have a FICO score around 760. I have one Travel Rewards Visa through my Credit Union. My new credit limit is $3,000, which seems ridiculously high to me.)

For many it is simply "because they can".

Beyond a certain point there is no real justification based on personal need or lowering of utilization. However, nothing wrong with high limits for those that manage credit responsibly.

Re: Why do people request such high credit limits?

Ardecko — Sun, 14 Oct 2018 16:30:25 GMT

I'd like to point you to this thread: https://ficoforums.myfico.com/t5/Credit-Cards/Calling-All-Ballers-Highest-Card-Limit/td-p/5255717

There's also a thread(that I can't locate now) where a guy announced he had crossed $1 million in total open credit.

The reasons will vary, some good, some bad, but, it is fun 😁

Re: Why do people request such high credit limits?

ScoreSizzle — Sun, 14 Oct 2018 17:10:27 GMT

So I can brag to people while I drink my espresso with my pinky in the air.

Re: Why do people request such high credit limits?

Anonymous — Mon, 15 Oct 2018 03:20:33 GMT

@ScoreSizzle wrote:
So I can brag to people while I drink my espresso with my pinky in the air.

That tripple Venti Mocha w/whip swiping Starbuck's OG Gold Card moment I get it heheh

Re: Why do people request such high credit limits?

ScoreSizzle — Mon, 15 Oct 2018 03:52:24 GMT

@Anonymous wrote:
@ScoreSizzle wrote:
So I can brag to people while I drink my espresso with my pinky in the air.
That tripple Venti Mocha w/whip swiping Starbuck's OG Gold Card moment I get it heheh

Hahaha that new Nitro Cold Brew, have you tried it?