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

[longtimelurker]

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@09Lexie wrote:

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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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I think you are missing my poInt.  I'm not paying for these upgrades- they are a product of simply using my cards for everyday purchases.  Yes, I can pay for upgrades but why would I if I can get them for free?

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I believe that here FicotoGo is referring to Lexie's earlier comment about cash-back cards (not cash!) vs rewards (points), and suggesting that cash from cash-back could be used to by the things she gets with points.

In general, this is not true.   There are a number of redemptions where the value per point is greater than 1, e.g. some premium cabin international flights can be valued at at least 3c per point, so you would have to spend 3 x as much on a cash back card as on a points reward card with the same earning rates.

[odd_dog]

Great question OP, I don't use my full credit lines everyday, or every month, but do use those limits at times. Not everything said on forums is LAW and the final word. EVERYONE'S situation is different. Focus on this, and many forums seems to be "what do I need to apply for a given card" "I am starting my credit journey and need advice" those are certain types of people that WANT to just GET a card to start with. My situation is WAY different, I don't necessarily care about my score BECAUSE I am not applying for cards (well not actively! LOL) - I am set, so these questions and answers about Util, AAoA, and PIF BEFORE your statement cuts, have little meaning to me and my current situation (although I wish I knew of this forum when I was younger!! Great info here!). To answer you question yes I do use my limits every once in a while. For instance when I get a bonus from work I will spend that amount on high priced things we need in the house - so I will charge 15K (AND PAY IN FULL!!  LOL). It is nice to have larger limits when you need them. I would agree if you don't own your own business or get bonuses from your company, you probably do NOT need huge credit lines. It really just matters how YOU spend, what YOUR goals are, credit wise. I think I am even up to the point where my combined credit limits are going to "top out" with lenders...you can only have so much "available credit" floating around before the lenders get "nervous". You know what you can afford and how you use your card.

[thom02099]

Just one more aspect to throw out there for OP and anyone else...

All of the prior comments are from "voices of experience".  Yes, there's diversity of opinion, but there is a common thread in the replies if one looks for it. 

Many of us are setting ourselves up for that day when we retire.  We started out as young bucks, thinking we could conquer the world...then reality sets in.  We make some mistakes along the way, we get in over our heads maybe, and have to work hard to get back on stable ground.  Bad divorce?  Poor job choices?  Crazy investment decisions?  All of these can influence what happens with our credit and it's history.  And can affect what our credit limits are and can be.  We work very hard to get those CLI up to a comfort level that we can enjoy. 

For me as a soon-to-be-retiree, the whole point of the last decade has been to set myself up with credit limits that were high enough that I WOULDN'T have to worry about reaching the limit and wondering how it would adversely affect me.  Having high CL doesn't equate to using it all.  Frugality is a means to an end.  Having a high CL on a card just helps me keep things in check. 

As has been pointed out here, and as I've read on other forums, there are consumers who routinely run hundreds of thousands of $$$ yearly through their credit cards, but there's the aspect of managing the payments in a timely manner that make the AMOUNT of the spend irrelevent to the card issuer as long as it's paid.  Hence, creditscholar spending $1700 on a meal and neither he nor the card company batting an eye.  Hence, Centurion holders running obscene amounts of money through their cards without raising an eyebrow.  Hence, Joe the Plumber or Common Man buying a big screen TV for Christmas at Best Buy and neither he nor the issuer caring....as long as it is PAID.    Anecdotally, folks here go over CL routinely in their SPEND, but PIF before it's due.  And then you have the NPSL cards, where one spends "without limit" (but we all know there is one).

Right now, I have over $130K in available credit.  I have NO INTENSION of EVER having to use all of it.  But it is good to have JUST IN CASE...  The trick is, if you do have to use it, can you pay it.  I can. 

[Fico2Go]

Odddog...wow that's an impressive exhibition of cards you have.  May I ask when your journey started?  And also are you planning to keep all the cards over time?

Thanks for your   feedback.. for me.. I have been using PayPal mastercard debit for over 10 years.  With 1.5% c ashback I've earned over $10K in the same period of time.  I am trying to convince myself on best practices in terms of how to maximize benefits with credit cards and how to go about it.  Being on this forum was a great start. 

[Fico2Go]

Thom... very well said.

>>>We started out as young bucks, thinking we could conquer the world...then reality sets in.  >>>>

That put a smile on my face. 

However I stalled a bit with this statement:

>>>>Right now, I have over $130K in available credit.  I have NO INTENSION of EVER having to use all of it.  But it is good to have JUST IN CASE...  The trick is, if you do have to use it, can you pay it.  I can.>>>>>>>

This brings me back to the orginal question.  If you were to be in the position of need to use every cent of your availalbe credit line do you believe the charges would go through if processed simultaneously? 

[longtimelurker]

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@Fico2Go wrote:

Odddog...wow that's an impressive exhibition of cards you have.  May I ask when your journey started?  And also are you planning to keep all the cards over time?

Thanks for your   feedback.. for me.. I have been using PayPal mastercard debit for over 10 years.  With 1.5% c ashback I've earned over $10K in the same period of time.  I am trying to convince myself on best practices in terms of how to maximize benefits with credit cards and how to go about it.  Being on this forum was a great start. 

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In terms of maximizing rewards, I think there can be little argument that the order is:

1) Manufactured Spend

2) Sign up bonuses

3) Actual spend

Now 1) has definite potential immediate risks, too much of 2) can put individual issuers off after a while, but in general that is the risk/reward picture.  So maximizing depends on your comfort level.

And then travel rewards of the right type have a higher value than cash-back, but if international premium cabin travel isn't of interest, that sort of doesn't matter.

[Fico2Go]

LTLurker.. again you have made some great points. 

As a cashbuyer I have been using Paypal 1.5% cashback for over 10 years.  If paying in full is the objective of high credit lines ..when compared to my 1.5% cashback card there are small differences REGARDLESS OF AVAILABLE CREDIT LINE.

As a former loan officer I also know that it's not necessary to carry many High Limit cards to get great credit.  Some people have been able to get prime rate loans with just three simple tradelines. 

Your comment reminds me that the AMEX NPSL and CENTURION cards are ideal for points due to their 3X+ rewards.  However for the bulk of other credit cards that do base on cashback and low rewards it would be a YMMV decision.  

It would then appear that after considering your comment and those of others.. the primary reason for using high limit cards is when you can earn 3x points or more and/or 3% cashback or more. Anything that pays less than 3C per $1 spent would be less valuable or null if in fact the objective is to PIF every month. 

[Blackrv7]

And also......I spoke in length here lately with a banker about high CLs on a persons CR.  He stated they wanted to see high credit limits with low usage.  That, to them, was an indicator of a responsible lendee.  Matter of fact, he said he would tie such a person up and not let them leave his bank without taking his bank's money He also said they would be more prone to provide a mortgage to the above referenced person over someone with a higher score but smaller CLs.

[thom02099]

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@Fico2Go wrote:

Thom... very well said.

>>>We started out as young bucks, thinking we could conquer the world...then reality sets in.  >>>>

That put a smile on my face. 

However I stalled a bit with this statement:

>>>>Right now, I have over $130K in available credit.  I have NO INTENSION of EVER having to use all of it.  But it is good to have JUST IN CASE...  The trick is, if you do have to use it, can you pay it.  I can.>>>>>>>

This brings me back to the orginal question.  If you were to be in the position of need to use every cent of your availalbe credit line do you believe the charges would go through if processed simultaneously? 

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Good question...and one that I can't answer.  I don't think any of us could.  There's way too many variables.  First and foremost, I'd never ever allow myself to be "in the position of need to use every cent".  That would be poor management on my part, not to see/anticipate such a circumstance and more importantly make sure it doesn't happen. That's what I learned early on when I was that "young buck"...never ever let yourself get in that position again. 

[longtimelurker]

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@Fico2Go wrote:

LTLurker.. again you have made some great points. 

As a cashbuyer I have been using Paypal 1.5% cashback for over 10 years.  If paying in full is the objective of high credit lines ..when compared to my 1.5% cashback card there are small differences REGARDLESS OF AVAILABLE CREDIT LINE.

As a former loan officer I also know that it's not necessary to carry many High Limit cards to get great credit.  Some people have been able to get prime rate loans with just three simple tradelines. 

Your comment reminds me that the AMEX NPSL and CENTURION cards are ideal for points due to their 3X+ rewards.  However for the bulk of other credit cards that do base on cashback and low rewards it would be a YMMV decision.  

It would then appear that after considering your comment and those of others.. the primary reason for using high limit cards is when you can earn 3x points or more and/or 3% cashback or more. Anything that pays less than 3C per $1 spent would be less valuable or null if in fact the objective is to PIF every month. 

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Not sure that summarizes the conclusions at all!   Even if you earn 1%, having a high CL allows you to buy more (earning the rewards), without having to pay multiple times a month etc.  (I am assuming here PIF means before the issuer reports to the CRAs, so utilization isn't an issue)

And people have given several reasons for liking high CLs, even without use.