Credit Limit too high?

[Kforce]

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@UpperNwGuy wrote:

I agree with BronzeTrader and climbfire.

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I agree with BronzeTrader. climbfire. and UpperNwGuy.

I keep my CL's at a reasonable level and have reduces many of them.

[AverageJoesCredit]

Interesting thread. Ill just say increasing or decreasing ones credit limit is a personal choice so no one should feel that theirs is a right or wrong reason. Everyone is entitled to their feelings on their managing of their credit.

[BronzeTrader]

In general, I keep about $100,000 each with the Big Three, AmEx, Chase + BA.  Then have some limited relationship with Citi, Wells Fargo and Discover, mainly for benefits.  So the total credit is like $300,000 to $400,000.  I'll cut each time that I'm close to $400,000 total exposure.

I have a total of 3 new cards in 2017.  Look to go below Chase 5/24 next year.  The new card will push out the old cards.  I do not worry about the AAOA since the closed old cards still age like 10 years.  I still see a Target Red card I opened in 2005 and was closed in 2009.

[Anonymous]

"I don't like unnecessary CL, it is waste lender's resource, make me uncomfortable if individual card CL is several times more than i need."


I like to remind...that this natural yet sustainable non GMO resource that banks spend Bil's mining at......comes from MT.Everyonespocket

[Thomas_Thumb]

Interesting discussion

I personally have never requested a CLD but, then I have never had more than 6 credit/charge cards. If credit cards are strictly used for personal spend an aggregate CL of 1x is more than sufficient to avoid drops in score even for those that allow charges to report naturally and pay by due date - if one spends within their means. 

For those that need to cover an infrequent, high, single expenditure (say a $20k charge) without wanting a spike in utilization - Put the expenditure on an NPSL charge card or pay the affected credit card balance(s) before post date(s). Even if a near limit balance were allowed to post on a credit card, the impact on score would stop as soon as the balance is paid down.

There is value in "downsizing" aggregate credit limit (ACL) especially if the ACL was built on spend requirements for a company (T&E) that are no longer in play. In a prior life I traveled all the time (home every other weekend). My company T&E spend was 2x annual income. I "fortunately" had a company card. However, If someone was putting that level of company expenses on personal cards, their aggregate CL might need to be 5x income to safeguard against bumping up against spend limits.

If company expenditures are no longer in play on personal accounts why risk exposure to potential fraud and limit ability to simplify and re-allocate? Go for the CLD! For those with 20 or 30 cards that want to simplify, close accounts and reduce aggregate CL. Excessive credit has downside risk with no real upside benefit.

If I needed $100k to cover a personal "short term" expense, it would not be through personal credit cards!

[BronzeTrader]

Just wonder what short-term "personal expenditure" will take to $100,000?  A fancy car?  A rare paiting?  I've not seen a regular credit card wtih $100,000 credit line.....

[Thomas_Thumb]

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@BronzeTrader wrote:

Just wonder what short-term "personal expenditure" will take to $100,000?  A fancy car?  A rare paiting?  I've not seen a regular credit card wtih $100,000 credit line.....

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Quite true, one would likely need to split cost among 3 regular credit cards. So, if a large amount of credit is needed, credit cards aren't the best approach.

Potentially auction purchases such as:

Rare coins/ paper currency, vintage cars, paintings, historical artifacts, certain antique furniture, gemstones. They often have a ROI that surpasses stock market returns.

I used to participate in US and World paper currency auctions as a collector. My bid LOC at the auction houses was typically high 5 figures but, I'd limit winnings bids to low 5 figures. However, more than a few pieces reached 6 figures and even 7 figures on rare occassions. It's a bit like gambling in that one can get over extended in obligations rather quickly. I avoided that pitfall but, came to realize that I might bid beyond my means if I continued to feed my indulgence.

[Anonymous]

Pretty much the only reason I ever want lower credit limits are when I want to apply for a new card at a bank but I know I am near their limit on what they will extend across all cards with them.

[JaeJae12]

Let me show you today of a normal credit card my friend

[K-in-Boston]

@JaeJae12 How do you like the Citi Diamond Secured MasterCard?  

Joking aside, that's great and what I hope to see from Amex and BOA in the not-too-distant future.