TCL in relation to income.

[Anonymous]

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@austinguy907 wrote:

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@digitek wrote:
Hi wandering,

I guess I should have said that I'm a mere mortal and could never charge more than $10k and PIF that month unless I was planning on it, and in the very small chance that I ever need to do that I could just request a CLI I guess, but still can't really see my self charging that much in a month.

The reason I keep the limits low is because I don't need it, I don't have to worry about insane CL's effecting my chance for credit in the future, and I don't even want to be tempted to carry that much debt with such an insane interest rate. It's a personal thing I guess, I do realize that I'm kind of handicapping myself 😁

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I can see some flaws in this approach but, if you don't own real estate it could be fine.

Having available credit is a positive and useful scenario if something comes up like a roof replacement (10K+) or HVAC goes out ($5-10K+).  Having the ability to use a current card with a low fixed APR of say 5% is kind of nice instead of pulling 10K out of thin air to cover the expense.  If you own you can also delay some payments with the CC float like paying your property taxes ($5-10K) and using the CC leverage to delay it coming out of your checking account right away.

We never plan for huge expenses in a given month but, being able to soften the blow with a good CL on your CC helps while you figure out where you ultimately want to put it or pick up a new CC with 0% that's got a decent SL that won't impact your ability to maintain your scores in the process.

I guess everything all comes down to perspective.  I like knowing I have options if a disaster hit and I needed to rent a car for a month along with a hotel and not have to worry about the expenses throwing off my ratios / scores.  Sure there's insurance but, delays due to large impact areas could be detrimental and you can always go for reimbursement within 30 days for the incurred expenses due to the loss. 

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This sort of thing is often given as the need for very high CLs, but to my mind at least it raises some issues.

Firstly, if a big emergency hit, I wouldn't be concerned with credit scores at all.   I need to fix the roof, rent a car and rent the hotel, and if that maxes out my cards at 90%, so be it, if and when I can pay it off, the score will correct itself.

And, I DO have to pay it off eventually.   I think that there is a danger that "too much" easily available credit may nudge people into decisions that will haunt them later, instead of looking for compromises that will be less expensive.

So, have enough credit to cover many things, but make sure that you would be able to pay it off eventually.   And don't worry about score when bad things are happening!

[Anonymous]

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@Anonymous wrote:
I read on Reddit recently that people were lowering their limits to help qualify for the CSR. Can anyone explain that to me in more detail? The postings were about 4-5 months old I think. Thanks.

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Without knowing the details of that thread, but guessing:

1) Some people might have felt that they had reached their internal limit with Chase, and would thus be rejected.   Reducing the CLs (on Chase cards) helps give room, so that maybe the CSR will be approved.    Now some lenders might negotiate anyway, and say we can give it to you by taking 8K from your Freedom (and some issuers do this without even asking), but you might just get denied and reducing the CLs might help avoid this.

2) Depending on which thread it was, people might have been looking for automatic approval (as they don't want a manual review of the account).   Lowering your CLs (on cards from that issuer) is a good way to maximize the chance of that.

[Anonymous]

Austin hit the majic words "real estate" Unless you keep a $10K stash for house repairs you will need  $10K worth of cards for that.  HVAC, Roof, electric, hot water 

As some people who havr  read my posts since Thanksgiving I was hit three times  by storm damage to the tune of over $10K in storm damage and upgrades in conjunction with the repairs. And the dollars keep  getting bigger.  I just had to get a HD card for the 6 and 12 month interest deals.  My roofer does not take credit cards.

With the storms I broke several truess and plywood.  Now because I replaced over 1000 sq ft of roof the rest looks bad and now I will have reroof the rest this fall once I replace the large cracked tempered glass windows from tree limbs hitting them.  Every dime we have made this year has gone into our house.     I want a house in a location with no storms. 

[austinguy907]

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@Anonymous wrote:

Austin hit the majic words "real estate" Unless you keep a $10K stash for house repairs you will need  $10K worth of cards for that.  HVAC, Roof, electric, hot water 

As some people who havr  read my posts since Thanksgiving I was hit three times  by storm damage to the tune of over $10K in storm damage and upgrades in conjunction with the repairs. And the dollars keep  getting bigger.  I just had to get a HD card for the 6 and 12 month interest deals.  My roofer does not take credit cards.

With the storms I broke several truess and plywood.  Now because I replaced over 1000 sq ft of roof the rest looks bad and now I will have reroof the rest this fall once I replace the large cracked tempered glass windows from tree limbs hitting them.  Every dime we have made this year has gone into our house.     I want a house in a location with no storms. 

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I feel for ya but, storms happen everywhere.... well everywhere east of the Sierra's on the west coast and moreso on the east side of the rockies.  Your options though get worse going west though with the fires and earthquakes.... and SE you deal with monsoons, hurricanes, and everything else water related.  Mov up the middle of the country and you're dealing wiht tornados and such alond with winter storms from hell.  I suppose you could aim for the top of a mountain in Hawaii or in the bush in Alaska.  It's rough no matter where you live if you're just on the wrong side of a flood plain or something.  Always over insure a bit and take the pocket hit now instead of after.  Having the plan and options for those cards if you need them and roll with the punches best you can and then get the check from the adjuster if you can.  If they put up a fight then hire a lawyer and send them dirty letters.  

[digitek]

Forgot about this thread.  I actually do own my house, a duplex and I rent the bottom floor.  I also keep $5k in an emergency fund in an Ally Savings account.  I also have Homeowners Insurance, which would pay for a lot of unplanned house repairs.  This is separate from my HSA medical emergency fund, which has about $7k in it.  If my emergency fund can't take the hit, I would probably get a HELOC or something with a much better interest rate.

I do realize that might not be typical for a lot of people.  I have a wife and 2 kids, so I have to save a lot and be frugal AF because every month it is always something unplanned that needs to be bought.

With all that said, I do agree with everyone that I'm really just kind of pussing out on high credit limits.

[Anonymous]

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@digitek wrote:

Forgot about this thread.  I actually do own my house, a duplex and I rent the bottom floor.  I also keep $5k in an emergency fund in an Ally Savings account.  I also have Homeowners Insurance, which would pay for a lot of unplanned house repairs.  This is separate from my HSA medical emergency fund, which has about $7k in it.  If my emergency fund can't take the hit, I would probably get a HELOC or something with a much better interest rate.

I do realize that might not be typical for a lot of people.  I have a wife and 2 kids, so I have to save a lot and be frugal AF because every month it is always something unplanned that needs to be bought.

With all that said, I do agree with everyone that I'm really just kind of pussing out on high credit limits.

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There are a lot of cards with zero percent interest intro periods.  For example my wife has USAA card with 18 months free interest.  I think there is a Citi card with zero interest for 21 months.  I wouldn't get a HELOC.  If you don't pay that they take your house.  You could also borrow from 401k in emergency but if you change jobs it is all do back immediately.

[wasCB14]

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@austinguy907 wrote:

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@Anonymous wrote:

Austin hit the majic words "real estate" Unless you keep a $10K stash for house repairs you will need  $10K worth of cards for that.  HVAC, Roof, electric, hot water 

As some people who havr  read my posts since Thanksgiving I was hit three times  by storm damage to the tune of over $10K in storm damage and upgrades in conjunction with the repairs. And the dollars keep  getting bigger.  I just had to get a HD card for the 6 and 12 month interest deals.  My roofer does not take credit cards.

With the storms I broke several truess and plywood.  Now because I replaced over 1000 sq ft of roof the rest looks bad and now I will have reroof the rest this fall once I replace the large cracked tempered glass windows from tree limbs hitting them.  Every dime we have made this year has gone into our house.     I want a house in a location with no storms. 

---

I feel for ya but, storms happen everywhere.... well everywhere east of the Sierra's on the west coast and moreso on the east side of the rockies.  Your options though get worse going west though with the fires and earthquakes.... and SE you deal with monsoons, hurricanes, and everything else water related.  Mov up the middle of the country and you're dealing wiht tornados and such alond with winter storms from hell.  I suppose you could aim for the top of a mountain in Hawaii or in the bush in Alaska.  It's rough no matter where you live if you're just on the wrong side of a flood plain or something.  Always over insure a bit and take the pocket hit now instead of after.  Having the plan and options for those cards if you need them and roll with the punches best you can and then get the check from the adjuster if you can.  If they put up a fight then hire a lawyer and send them dirty letters.  

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SoCal here...would happily trade earthquakes for a few storms in this heat/drought!

Big CLs seem a poor substitute for cash when it comes to property repairs. Not many contractors will take CC payments, and AA could strike just when you need the cards. Is the strategy to take a giant cash advance?