Requesting lower credit limits?

[disdreamin]

I wondered how crazy it would be if I contacted my banks and requested lower credit limits on my credit cards. I have a few accounts with Chase and one with AmEx and Citi. I'd like to take advantage of a nice SUB with a new AmEx card some time in the not-too-distant future and was considering requesting my limits on most of my exisiting accounts be lowered but don't know how that might impact future apps.

I don't carry cc balances month to month and usually only have a couple accounts post a statement balance. I'm not overly worried about % utlilization, although every once in a while I don't time payments well and might have a few thousand post - I figure if % util happens to be high for a month it will recover the following month.

Thoughts about this? I'm wondering if there are unintended consequences I haven't considered.

[SouthJamaica]

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@disdreamin wrote:

I wondered how crazy it would be if I contacted my banks and requested lower credit limits on my credit cards. I have a few accounts with Chase and one with AmEx and Citi. I'd like to take advantage of a nice SUB with a new AmEx card some time in the not-too-distant future and was considering requesting my limits on most of my exisiting accounts be lowered but don't know how that might impact future apps.

I don't carry cc balances month to month and usually only have a couple accounts post a statement balance. I'm not overly worried about % utlilization, although every once in a while I don't time payments well and might have a few thousand post - I figure if % util happens to be high for a month it will recover the following month.

Thoughts about this? I'm wondering if there are unintended consequences I haven't considered.

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I wouldn't. Big banks like Amex don't mind that you have a lot of available credit. Generally, only credit unions care about that.

[MrDisco99]

I know Amex will approve new cards and just transfer credit from an existing account if they think you have too much.

Chase will let you do that on recon.

[iced]

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@MrDisco99 wrote:

I know Amex will approve new cards and just transfer credit from an existing account if they think you have too much.

Chase will let you do that on recon.

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Chase will also do it automatically. I know at least one instance of an instant approval where they just picked the person's highest balance card and carved some out of its CL to give to the new card.

[disdreamin]

I actually had to do reallocation when I opened my CSP, but the strange thing was I carved out $15k from my other limits and they made my limit on the new card $25k. It was very odd.

I'm curious what the rationale against lowering limits is - people are saying not to do it but providing no reason. If I choose to do this I'd be sure leave myself usable limits ($10k-$25k). I'm just not sure what the benefit is of having overly generous lines of credit I could never realistically utilize without being in deep doo-doo. I can't see how lowering the limits a bit could negatively impact me, but like I said maybe there's some angle that I am not aware of.

[SouthJamaica]

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@disdreamin wrote:

I actually had to do reallocation when I opened my CSP, but the strange thing was I carved out $15k from my other limits and they made my limit on the new card $25k. It was very odd.

I'm curious what the rationale against lowering limits is - people are saying not to do it but providing no reason. If I choose to do this I'd be sure leave myself usable limits ($10k-$25k). I'm just not sure what the benefit is of having overly generous lines of credit I could never realistically utilize without being in deep doo-doo. I can't see how lowering the limits a bit could negatively impact me, but like I said maybe there's some angle that I am not aware of.

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1. I know of no advantages to doing it.

2. I can think of a few slight disadvantages to doing it:

(a) it removes some utilization cushion

(b) it might lower the floor for starting limits on new cards

(c) it might appear to a loan officer as a sign of distress

[disdreamin]

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@SouthJamaica wrote:

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(a) it removes some utilization cushion

(b) it might lower the floor for starting limits on new cards

(c) it might appear to a loan officer as a sign of distress

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I'm not at all worried about utilization, as I mentioned. Whether my total available credit is 120k+ or ~100k isn't going to make much of a difference if I happen to allow $3-4k to post occassionally. As far as the floor for new cards, again not too worried about it. If I lowered AmEx I'd go down to $25k from $35k and I'd leave $25k+ on at least two other cards. I'd think those should be enough to keep any new limits reasonable. I'm not talking about turning anything into a toy limit except perhaps one Chase card that has been SD'd for years that I'd be willing to take down to $5k.

The last part - how can a loan officer see the history of credit limits on cards? I wasn't aware this was something they could view, I assumed only the current limit would show, not any history. I guess on the upside I don't plan to apply for any loans in the near future, barring an accident where I'd need to replace one of my vehicles. I can't imagine how slightly lower credit limits could impact that.

[Anonymous]

There are a few standard scenarios where it makes sense, none of which may apply!

1) Concern about spending.   There are some who find available credit a temptation to max out the cards.   Reducing CLs can minimize damage.

2) Reaching a limit with an issuer.    You have $X CL with issuer Y, and that is the max, but they have just come out with that great card you just have to have.   As stated, some issuers will automatically reduce limits to get you the card, but not all of them do, and a proactive CLD may make the process go more smoothly.

3) No eyes on the account.   For people who have been using their cards "creatively" you may want to guarantee (as near as possible) an automated acceptance rather than risking a manual review.   Doing CLDs (well prior to application) can help this.  (ETA:  With increasing sophistication of AMEX RAT and similar teams from other issuers, this has probably become less used, as the manual review is no longer the main danger.   But in my brief time on the dark side, this was one recommended approach!)

[Kforce]

Like most credit card advice it comes from personal view and how one uses there cards.

Many on this forum have CC's as a hobby and CL's for some reason seem important.   If one wants to take advantage of balance transfer offers CL's are important.   If one wan't to use the float and pay last second CL's help utilization and higher CL's are positive.

If one uses CC's like you and I, it is not really important.   I have lowered and capped all my cards at $20,000 and a couple were $50,000 prior.   Had all at 20k and the last card I got gave me 40k, had to have it lowered.   Have purchased many houses, cars etc, and having capped CC limits is not an issue.   It seem to also not have much effect on starting limits for me.   As long as my limit is at a level where monthly utilization is reasonable and large enough for my largest monthly purchases it is good.

All my cards are lowered and locked, and I have seen no negative actions because of it.   If I need a new loan I just would activate "AZEO" with plenty of lead time.

Have not been able to figure what good it is having 5-10 times ones income in a credit product with 18% interest.  I must be missing something.   

[disdreamin]

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@Anonymous wrote:

There are a few standard scenarios where it makes sense, none of which may apply!

1) Concern about spending.   There are some who find available credit a temptation to max out the cards.   Reducing CLs can minimize damage.

2) Reaching a limit with an issuer.    You have $X CL with issuer Y, and that is the max, but they have just come out with that great card you just have to have.   As stated, some issuers will automatically reduce limits to get you the card, but not all of them do, and a proactive CLD may make the process go more smoothly.

3) No eyes on the account.   For people who have been using their cards "creatively" you may want to guarantee (as near as possible) an automated acceptance rather than risking a manual review.   Doing CLDs (well prior to application) can help this.

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Hahaha, yeah I would have to do a lot more than I'm contemplating to minimize damage if temptation took over. #1 definitely does not apply.

The internal limit, I've reached with both AmEx and Chase at one time or another. For AmEx I used to hold two cards and the two combined were ~$50k if I recall. At the time, my income was considerably lower and they balked at CLI without the tax return form (number is escaping me...4506T I think). I declined and stuck with the limits as they were. Anwyays, I dropped one of my AmEx cards - co-branded Delta Plat - because the perks were no longer worthwhile to me. I want to app for the Gold or Platinum in the next few months and am thinking the proactive lowering may help with this.

For Chase, I definitely hit their internal limit when I app'd for CSP and had to move limits around to get it. I wouldn't mind lowering those to get below their radar, although I am not sure it matters.

As far as #3, they are welcome to peruse. I don't anticipate a loan officer reviewing my reports for some time, if ever. I don't foresee a mortgage within the next 8-10 years, and possibly never. I'd like to eventually build and might have to see about a contruction loan I guess.

Thank you for all the feedback on the idea of lowering limits. I think I'll just ponder it a bit and maybe just drop the limit on the SD'd card. For AmEx, I'll look up where I hit the internal limit with them prior to app-ing for a new card just to be sure there's a generous amount of space available.