What is the purpose of having a high CL when u never use it?

[Fico2Go]

Lexie.. yes i see your point.  Personally I like the idea of getting prioirty boarding on planes and gettting priority seatings on Amex products.  So yes i certainly understand and also excited about many of the benefits from using CCs. 

Actually this topic has validated some of my biases of using credit cards and also has emphasized many advantages to using them as well. 

My main point from the beginning wasn't to zoom in whether rewards programs were good or bad but whether any of our members here has used up say $50K of their $50K credit line due to the strict AA and FR of some of the creditors. 

[Walt_K]

I've charged a $30K hotel bill.  I know others have charged lots higher.  

[Fico2Go]

WalterK.. you are correct.  I have been reading up on old posts.  So perhaps a bit of paralysis analysis in motion here. 

[enharu]

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@Fico2Go wrote:

Lexie.. yes i see your point.  Personally I like the idea of getting prioirty boarding on planes and gettting priority seatings on Amex products.  So yes i certainly understand and also excited about many of the benefits from using CCs. 

Actually this topic has validated some of my biases of using credit cards and also has emphasized many advantages to using them as well. 

My main point from the beginning wasn't to zoom in whether rewards programs were good or bad but whether any of our members here has used up say $50K of their $50K credit line due to the strict AA and FR of some of the creditors. 

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Not including any marcoeconomic causes, lenders don't just take AA because you used up most of your credit lines, as long your DTI ratio doesnt exceed their threshold. If you max out several cards or went on an app spree and then racked up a huge debt, then that may result in AA as well simply because it's risky behavior.

I've charged up >10k on most of my cards where the CL permits, and I have also charged above my CL on several cards, especially on my CSP. None of the lenders have taken any AA against me so far. If I am not applying for any credit, I'll usually just let the balance report as well, so my utilization may seem sky high at certain times and my score takes a hit because of that. I do pay in full most of the time, though I may leave a couple thousand dollars in balance if the card has a 0% promo.

[icetrap06]

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@Fico2Go wrote:

Lexie.. yes i see your point.  Personally I like the idea of getting prioirty boarding on planes and gettting priority seatings on Amex products.  So yes i certainly understand and also excited about many of the benefits from using CCs. 

Actually this topic has validated some of my biases of using credit cards and also has emphasized many advantages to using them as well. 

My main point from the beginning wasn't to zoom in whether rewards programs were good or bad but whether any of our members here has used up say $50K of their $50K credit line due to the strict AA and FR of some of the creditors. 

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I'm certainly not an expert, but if the amount is paid in full (regardless of the amount), why would it trigger AA or FR?  At the end of the day, isn't AA or FR based on the concern that a person won't be able to pay?  If that assumption is correct, then charging this amount and PIF should actually provide more confidence not trigger AA...just my opinion.

[chwebb1]

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@Fico2Go wrote:

Chwebb I am thinking and learning the best way to use CC for me is along the same line as u have described.  Maybe 10% ratio is too little for me.  When needed I could go up to 90% or all of the available balance as long as I can PIF at end of month.  I dont think  any creditor is going to shut down a good customer that pays them back on time.  I would imagine that the scores could be managed in such a way that you will always have the highest scores when scores become needed. 

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Credit cards are definitely tools. If you need to use it and have a plan to pay it back, use it as you see fit. I don't see any issue with using a good portion of your credit line and paying in full before the statement cuts. I've personally never gone above 70% on most of my cards except for my BB&T card, but as long as you pay the bill, I doubt that the credit card companies really care how much you spend.

[notfancy]

I have a couple small limit cards. I've used them a bit too much on "bigger" purchases and carried the balance intending to pay it over time. My UTL was therefore high, and it made it so that I couldn't get approved for bigger and better cards.

The upshot of this is that I got to keep some of my reserves longer if I had them, or was able to get what I needed immediately with the comfort of being able to pay it back over time when things were a little more tight financially.

The down side is that my credit scores and credit worthiness to other's took a hit. If I had higher limits, would I max them? No, but I'd probably show lower UTL, with out changing any of my previous pattern or having to worry. Now I have to be concerned about getting better cards or more importantly a car loan.  With what my history has shown due to my carrying a high balance compared to my limits is that I'm a credit risk that can't manage my finances which isn't actually the case.

So, I guess you could say that high balance cards for some people are creating a glass ceiling. It is just that the ceiling gets higher as the total credit limit is. If my whole credit limit is 1k, my "glass" limit is $100 if I want to appear responsible, but if it is 10k, then my limit goes up to 1k. I can still carry the same percentage of a balance over time (and pay interest on it if I need or want to) but it looks less bad to creditors.

I know I should pay in full all the time, no matter the limit, but if I can't or don't want to, then I have to be careful how much of that limit I tap in to.

[notfancy]

That all being said, if I want to use my whole limit, I can, and it hasn't caused me any immediate trouble, only long term trouble when I want more cards, CLIs or other loans... which to me is a bad thing.

[Fico2Go]

I never ceases to amaze me the power of crowd sourcing and how each persons comment here provides one missing piece of the puzzle in my pursuit of best practices and effective uses of CC.   A big warm thank u to all.

I have been checking my wishlist twice and have extensed my  gardening season for one full year. Based on your positive feedback and my recent 4 for 4 approval six months is too short for harvest season.  Unless I can convince existing creditors for SP increases there wont be any app or CLI for me until late 2014 to early 2015. I realized I took a great deal of risk already by lowering my AAOA with four new accts.  Yikes!!!

However I view it as a necessary evil and cost of future opportunities.   The sooner accounts start together the sooner they will age together too.  That was my thinking.

My goal is to maximize chances for high CLs with minimum risks.

In taking everyones feedback on an earlier posting I made asking why people use CCs, my calculation is to obtain one and only one  from each of the major creditors with the highest cl and later go for quantity.  The exception is amex because of thier charge card option.  My gardening season may extend even longer until I have received one from each prime lender.  Only then will I move to increase # of product per provider.  I believe this strategy will diversify products and leverage risks with investing too heavily in one or two baskets.  I read yesterday another member here had two of his highest limit cards cancelled in the same week.  What a nightmare after months years of gardening to face this possibility.

I currently have an auto loan and student loan as well.  Both are reporting positive history.

With these in mind I will continue to take any advice from u as well as help those starting out on best practices.

Thank u again

[takeshi74]

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@Fico2Go wrote:

What is the purpose of having a high CL when u never use it?

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Why do you think the purpose of a credit limit is to use as much of it as possible?  That reasoning just leads to insurmountable debt and poor credit.

Already stated above but the point (to me) of having my CL's where they are is so that my regular spend is ~10% without micromanagement.

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@Fico2Go wrote:

I understand what you mean by using High CL to lower DTC ratios.  So let's assume you have five accounts with $5K each CL.  Total available CL is 25K. 

To keep the ratios low you can use only $2500.  

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First off, optimizing utilization isn't really necessary unless apping for something.  Second, one can use however much one wants and adjust balances prior to statement close to manage reported utilization if that is desired.

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@Fico2Go wrote:

There must be a better way. since there's 22.5K in wasted credit.  

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Credit isn't a nonrenewable resource.  It's a tool.  It's not "wasted" if it's not actively being used.

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@Fico2Go wrote:

I bet the credit companies know this all too well.  They know that even if they grant CLs of $50K the accountholder will use no more than $10K. 

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You're assuming that myFICO represents the masses and it does not.  Any discussion forum, on any topic, provides a skewed sample.

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@Fico2Go wrote:

And if that person uses more than 10K a domino effect begins to take hold.

AA for possible account closure;

Other creditors following suit;

interest rate goes up;

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One can certainly use one's credit over a short term without AA.  It's prolonged high utilization with minimal payments that is seen as a risk that leads to AA.  I've charged $19K to a $25K card and have not encountered AA as a result but I wasn't carrying the balance for a long time.  I've also had AA from high utilization over a very long period of time.  It's not just the utilization % itself that matters.

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@Fico2Go wrote:

If PIF is the case and objective in most cases then it's not much different from having say a PayPal debit card that pays 1.5% cashback.  Only with credit cards u have almost two months float in some cases.   

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There's more than just that.  Debit cards do not build credit.  It's not just what one's current limits are but what one's goals are as well.  Few people are at a point where they aren't wanting more credit or in need of building credit and can just rest on their laurels.

I don't understand in general how you're equating PIF to a 1.5% debit card.  The 1.5% debit card isn't earning me rewards >1.5% that I'm getting on cards that I PIF.  It probably doesn't have the other features and benefits either.  It certainly isn't building my relationships with my creditors.

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@Fico2Go wrote:

Lexie... rewards whether baggage fees or seat upgrade or concierge services can be paid with cash too.  So I'm not quite convince.. not yet a tleast.. that cash is inferior to rewards programs.  Unless of course the value in rewards broken down as cost value exceeds that which cash could buy. 

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It's not our job to convince you.  It's your job to find the solution that suits you best.  That said, what you find best isn't universally best.  I've done the cost/benefit analysis for my cards and they suit me just fine.  You need to do the same using your own needs/wants/goals/preference/priorities/etc.