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Big banks handing out CLI's to subprime

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Valued Contributor

Big banks handing out CLI's to subprime

Read this today and thought I would share. I remember not long after I joined this forum, I asked the question about high limits and how risky I thought they were for people to potentially get into debt beyond their means. I got my head bit off and since then I too have been busy building up more limits that I really need. 

 

It seems there is an increase of banks offering higher and higher limits because their studies have shown that people tend to carry the same percentage of the card's limit regardless of how high the limit is. So if someone normally carries 80% on a 2000 CL, over time they will also start to carry 80% on a 10K limit earning banks more money. Personally I learned my lesson going through a BK so I can't stand to see a balance of any amount even if it is a 0% offer, but it seems that is not true of everyone. Be careful with those limits folks, it may get you into trouble.

 

https://www.bloomberg.com/news/articles/2020-01-23/banks-are-raising-credit-card-limits-without-aski...

 

 

 

 

 

 

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Valued Contributor

Re: Big banks handing out CLI's to subprime

Meant to post this in the news section, can a mod move it?

Started Rebuild 4/2018: EX 616| TU 604| EQ 621

Current 1/03/20:


First Goal Score: 750+ Reached 3/2019

Next Goal all over 800
Message 2 of 20
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Super Contributor

Re: Big banks handing out CLI's to subprime

I learned something new today, the term PCLI.

Message 3 of 20
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Frequent Contributor

Re: Big banks handing out CLI's to subprime

Start congratulating people on their PCLIs and see how long it takes for someone to ask what the heck you’re taking about. 😂

Edit: Thank you for posting, OP. That was a really good read!

FICO 8 4/20: EX 726 TU 728 EQ 723
Message 4 of 20
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Super Contributor

Re: Big banks handing out CLI's to subprime

Congratulations on your PCLI! lol. Then, we'll have to refer them back to this post.

 

Thanks for the post @dynamicvb 

 

 

Message 5 of 20
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Moderator Emeritus

Re: Big banks handing out CLI's to subprime

Really interesting write up! Appreciate the new "heads up" and good advice. Would have been really good before I went goofy back in time over high CLs and got in over my head Smiley Sad
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Established Contributor

Re: Big banks handing out CLI's to subprime


@dynamicvb wrote:

Read this today and thought I would share. I remember not long after I joined this forum, I asked the question about high limits and how risky I thought they were for people to potentially get into debt beyond their means. I got my head bit off and since then I too have been busy building up more limits that I really need. 

 

It seems there is an increase of banks offering higher and higher limits because their studies have shown that people tend to carry the same percentage of the card's limit regardless of how high the limit is. So if someone normally carries 80% on a 2000 CL, over time they will also start to carry 80% on a 10K limit earning banks more money. Personally I learned my lesson going through a BK so I can't stand to see a balance of any amount even if it is a 0% offer, but it seems that is not true of everyone. Be careful with those limits folks, it may get you into trouble.

 

https://www.bloomberg.com/news/articles/2020-01-23/banks-are-raising-credit-card-limits-without-aski...

 

Carring the same percentage may apply for the general public, or people here who are rebuiding or just starting out. I have a couple of low limit cards which I prepay to keep the UTI below 8.9%, but will not spend any extra just because I get a cli. I like to have larger limits so I can keep my UTI down and help my score, or if i have a large purchase come up (somthing I would be able to cover with cash if I had to) but I would be able to get the rewards, or purchase rotection, and take advatage of any other CC benifits. many, of not Most MyFico members have more knwolege, or are more financily astute than the avrege credit card user.

 

 

 

 


 

Message 7 of 20
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Valued Contributor

Re: Big banks handing out CLI's to subprime

Most interesting part is auto CLI are regulated and only account for 4% of increases. Also...house of cards economy, literally
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Super Contributor

Re: Big banks handing out CLI's to subprime


@Ficoproblems247 wrote:
Start congratulating people on their PCLIs and see how long it takes for someone to ask what the heck you’re taking about. 😂

Edit: Thank you for posting, OP. That was a really good read!

Good OneSmiley Very Happy

Message 9 of 20
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Frequent Contributor

Re: Big banks handing out CLI's to subprime

So all auto CLI's are really PCLI's. Now I know the appropriate terminology



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