Why so high on the credit limits?

[GatorGuy]

Every semester I pay for my wife's tuition on our CC. This expense alone is $11k so imagine what that would do to Util for that month if you didn't have high CL's. And that is considering you don't make any more purchases that month. So it is just because of different usage patterns.

[cashnocredit]

My cls, now just over 50k, are sufficient for my needs and then some but I didn't have, or use, credit just over 4 years ago. I use my CCs as a convenience and don't carry balances. Since I'm retired carrying balances or going into any kind of debt would be extremely unwise.

My Amex is used for the occasional, very high purchases that would exceed CLs on my other cards. It's possible, even probable, I could use one of my other NPSL cards for these but I really don't know for certain.  Credit availability is always uncertain regardless of limits. Still, I am comfortable with the credit I currently have and am not pursuing higher limits

[Open123]

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bfranklin825 wrote: 

My question is: Why does anyone need THAT much credit? Why would I need limits that equal or exceed my yearly salary?

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Ah, you really don't, but here are a few reasons where having a CL which exceed's one income may be prudent.

1. To keep your Utility at manageable levels.  Let's say, like most of here on myfico, you prefer to keep Utility at 10%.  If your montly expenditures are $5K, then you'd need at least $50K in aggregate CLs.  Morever, let's say you have a huge fixed bill of $10K, then you'd need $100K to keep it at 10%.  

2.  Some actually need it CLs above their salary.  For example, reimbursable business expenditures for companies which do not issue CCs.

3.  Applying for sign-up bonuses which each issuer matching the CLs of prior ones--the higher limits begets higher limits.  Over time, the CLs just inflate to easily $100K or above.

Regarding reason #1, I know one can pay before the statement multiple times, but some of us don't want to go through the hassle, just want to pay once with a balance due.  For this, large CLs make it possible without hurting utilization.

[Anonymous]

To keep my utilization low. All my credit cards are set to auto-pay the balance in full on the due date, and I'd rather not deal with having to manually go in and make payments before my statement date.

[takeshi74]

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@bfranklin825 wrote:

My question is: Why does anyone need THAT much credit? Why would I need limits that equal or exceed my yearly salary?

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Needs vary.  No one can tell you why you would or wouldn't.

In any case, as stated above, it's not just a matter of "need" but also a matter of maintaining desirable utilization levels.  You might want to read up on utilization and how it affects your credit.

[scenery_guy]

Back before the housing crunch when credit seemed much more available big fat limits were easy. At one point I had a BofA card with a limit of $100,000. Sadly they CLD me out of the blue down to $26,000 but I managed to argue and fight to get it back to $46,000. That was a crush to my ULT at the time, I mean who needs a bunch of cards if you had one reliable card at $100K? My mistake at the time. 

Today, for me at least, it takes multiple cards to get to that kind of available credit. I'm actually better than double that old limit now but spread across personal and business cards. 

Why so much? It's nice to be able to make large purchase s for home (appliances, furniture etc) and not get anywhere near the limit. For my business sometimes I spend $50K to $100K in one month. I could write a check for it but gathering the miles and points from the card usage is well worth it.