I know having big lines is nice but what's the point?

[BarryNTexas]

IWOL, great discussion topic.  I have wondered that myself as I have been living in a cash world for almost ten years now.  But recently I have had a job opportunity come to light that will likely require me to carry a personal CC with at least a $15K limit so I can book travel/expenses.  This situation has motivated me to fix my credit scores and unfortunately it won't happen fast enough.  I think the job is coming along faster than my taking care of derogs.  I think it's YMMV on how we view credit and total available credit but would expect it's a part of ones total financial package.  One can't live on credit cards during retirement right? 

My largest CL is $7.5K and I have not been approved for an AMEX npsl card so not sure I will handle the travel expenses if I do take that role...

Good luck to you and what ever you decide is your perfect portfolio! -Barry

[takeshi74]

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@IWOL wrote:

Was wondering for those of you that have huge amonts of revolving available credit, what purpose does it really serve.

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The purpose of having high limits isn't to actually use all of one's available credit.  Keep in mind that utilization accounts for 35% of your FICO and 30% utilization is the generally recommended max while ideal is probably 10% or less.

For me, the purpose is to keep my regular spend at ideal levels without micromanaging my utilization.  This is a very common topic so don't overlook the many other threads on the matter.  Just a few from a quick site-restricted Google search are below:

http://ficoforums.myfico.com/t5/Credit-Cards/What-is-the-purpose-of-having-a-high-CL-when-u-never-us...

http://ficoforums.myfico.com/t5/Credit-Cards/What-is-the-purpose-of-a-100k-limit-on-a-credit-card/td...

http://ficoforums.myfico.com/t5/Credit-Cards/Why-so-high-on-the-credit-limits/td-p/2237827

http://ficoforums.myfico.com/t5/Credit-Cards/Benefits-of-high-Credit-LImits/td-p/1349597

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@IWOL wrote:

Your monthly spend outside of mortgage and car, even if you live lavishly wouldn't/couldn't be more than say 10 to 12k a month....or let's say you really like to live it up and spend all your monthly disposable income and we put it 16k. 

If you pay in full most/all of the time than say 30k in revolving credit would be more than enough to meet those needs. I understand that sometimes there is a crash crunch or whatever...so then 50k would more than coveri it.

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16/30 = 53%.  16/50 = 32%.  Even the latter is above the recommended max.  No need to go into the specifics but my limits and spend typically fall at about 12%.  Less would probably be better for my credit scoring but 12% is close enough for me and I'm happy enough with my FICO's at that level of utilization.

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@IWOL wrote:

m not knocking having a large amount of available credit just wondering why someone who spends 15k a month, PIF would need so much. 

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Why are you so concerned about what others need or want?  If you don't want high limits you don't have to get them.  You can get your creditors to stop increasing your limits and you can even request CLD's.  You need to do whatever works for you.  Others may not do the same.  Credit isn't a one-size-fits-all thing.

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@IWOL wrote:

Seems to me like that situation can just be a setup for bankruptcy.

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Limits alone do not lead to bankrputcy.  Poor credit and financial management do.  Again, it's a subjective matter.  If one can't mange high limits and wants to mitigate risk then one can exercise control over one's credit limits.  You're falsely assuming that the two are mutally inclusive.

[Anonymous]

Some of the high total limits here simply come from the people having lots of cards (another common topic).  Whether this is because people here are particularly credit-savvy, or are just a bunch of losers who need to get a life is open to debate, but in general people here are interested in credit cards and will have more than the US population  

According to http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276... the average adult has ~2 cards, and the average card holder, i.e. excluding those with none, has ~ 4.  People here seem to have significantly more.

[Swapmeet]

I just want people on the internet to think I'm cool....

[thom02099]

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@Anonymous wrote:
It really depends on your lifestyle and needs.

Most people need bigger lines because they put business / reimbursable expenses on their personal cards. That alone can sometimes add up to a 5-6 digit bill each month, depending on your profession.

And then there are people who just want bigger lines just so they have the flexibility, if they ever need it. There's nothing wrong with planning for worst case scenario. You just never know how much you need during an emergency, because like the saying goes: when it rains, it pours.

And obviously there are people with huge lines or are trying to get huge lines that are using them irresponsibly. Well some people have to learn things the hard way. So be it.

And back to the example you gave:

A 5k mortgage payment is pretty standard, or even considered somewhat insignificant, depending on which part of the country you reside in. Same goes for expenses. Someone who's living in the middle of nowhere may think 15k is a lot of disposable income to spend, whereas for some people 15k may just be equivalent to several nights out at the club or cost of a few fanciful meals at a prominent restaurant.

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And to expand just a bit off this excellent example....OP may or may not be assuming a family of 2.  The cost of children is huge!!!  OP may or may not be a parent.  If not, there are expenses associated with raising children that one simply cannot budget for, as they can occur suddenly.  Those medical expenses?  Ever have a kiddo fall and break something?  There's certain out of pocket expenses that one cannot plan for. Someone with a high income may or may not have adequate health care coverage, or may have very high deductibles, if they are self-employed.  Depending on the number of kiddos one has, the costs for extracurricular activities after school can be astronomical, depending on the activities.  Travel with children?  Good luck with that!   The costs increase dramatically when flying 4-6 (or more) people somewhere versus 2 people. 

Just one more aspect where higher credit limits are a benefit.

I don't disagree with OP's original premise, though.  There can and should be a point where "enough is enough".  Credit management is not a competitive sport.

[Anonymous]

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@Swapmeet wrote:

I just want people on the internet to think I'm cool....

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Sorry, with cool inflation, as of Feb 10, 2014, to be cool you need one of:

1) One card with CL $17K or above

2) Two cards with CL $15K or above.

3) Seven cards with CL 10K or above

So not cool yet, but you are getting there!

[Swapmeet]

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@Anonymous wrote:

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@Swapmeet wrote:

I just want people on the internet to think I'm cool....

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Sorry, with cool inflation, as of Feb 10, 2014, to be cool you need one of:

1) One card with CL $17K or above

2) Two cards with CL $15K or above.

3) Seven cards with CL 10K or above

So not cool yet, but you are getting there!

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Damn inflation! I will be cool one day, you just wait!    Of course I'm being facetious...Only because I feel like the question has been answered well....and I'm a bit ornery before 8 am...lol.

[Lin55]

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@unc0mm0n1 wrote:

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@Vegas247 wrote:

IWOL...i was asking myself the same question because I see a lot if not most everyone here wanting a higher credit limit. I do as we'll want higher credit limits...

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...expenses add up quick. I think the answer to the original question is that not everyone is the same. I need my high limits because even though I pay in full sometimes my statement cuts with a balalnce and I don't want my score to drop..... If I had much lower credit limits revoling such a b ig debt would kill my score. Maybe you don't use your increased credit, which is completely fine but some of us do and having it is helpful.

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+1000 here. I just started working and between me and my SO we avg about $15K a month (she's now my AU). I have $44K in total CLs (Last month it was only $12K!). I have to freakin' micro-manage my UTIL all the time so my score won't drop (looking for a HL and AL within the next 5-16 months so I need high scores.) And yup, micro managing UTIL all the time is ANNOYING. 

If i had $160K in available CLs, then letting my $15K report monthly will only be 9% UTIL. So assuming our spend will be the same, my goal is to have $160K in CLs. Possibly a dream though but we'll see...

For now, my Amex charge card is helping with UTIL for big expenses but I prefer Chase UR points so we pretty much max out our Chase cards and micro-manage the UTIL.

[USF813]

To the OP, I certainly support your well reasoned question. I don't believe anyone, aside from someone running a business NEEDS that much revolving credit.

[lg8302ch]

Well... to be honest my CLs are insane for my income. Personal payments only. I could easily live 3 yrs on my CCs. But I know my capability of re-payment and therefore will never ever use these lines but what  I like is that if I need to buy something that is a bit more expensive I can choose the card which fits best in terms of rewards and not the card that might allow me to pay. The ideal limit on a card for my income would be 5K and in my opinion sufficient as I PIF and do not want to carry balances. But if lenders give me that much more  I'll  take it but any CL above 5K is luxe and using up the CLs on my cards would put me into big big troubles.  So I keep doing what I have always done...PIF and nothing else. I hate interest anyway