Credit limits make me feel safe.

[RobertEG]

Looking at the flip side of the coin, i.e., how creditors view higher CLs, therir data shows that, on the average, consumers will spend more when their credit limit is increased.

Thus, they grant CLIs, not to help consumers, but rather to fatten their wallets.

It is great if you can obtain a CLI, and yet not increase spending.  Most consumers tend, when granted a CLI, to increase spending up to approx. their prior % util levels.

That is why creditors grant them, with the proviso, of course, that the higher limit is not considered an unreasonable risk.

[Man-Of-Steel]

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@CreditDunce wrote:

I am just the opposite.  Having a nice emergency fund / savings is what allows me to sleep at night.  

When I app'd for CC's last spring, I didn't exactly lie about my income.  But I didn't include all of my income , either.  I was trying to limit the size of my CL's.  I really don't need a 5 digit CL on my Freedom to take full advantage of the 5% categories.  I do have one CC with a high limit, but I don't feel the need for more than that.  I am sure I am in the minority here, though.

If I ever had to carry a balance, having to pay the high interest rates would drive me insane.

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+1.  I'm late to the party here, but I agree with this completely.  I look at my credit limits as an achievement, but they don't really give me any sense of security.  I'm way more impressed with the amount of money I have saved in my high yield savings emergency fund.  The main benefit of my credit lines is that in the event of an emergency, I can use them to buy me time to get access to my emergency fund.  I usually keep a limited amount of direct/immediate access money in my checking account.

Also, unfortunately in my case, all of my credit lines have high APRs.  I would feel very uneasy and uncomfortable paying any amount of interest on these credit card loans.  Currently I pay all of my CC balances in full and don't pay a penny in interest.

[Man-Of-Steel]

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@Anonymous wrote:
This is a false sense of security. Imagine that something did occur that made you utilize 90% of your CLs and carry a balance for a month or two making only minimum payments. Your lenders would CLD all of your cards as soon as you paid off your balances, and if they are being generous that day, still allow you to keep your accounts.

LargeCLs are only good for when you don't need them, and for bragging about onmyfico. Using them for real emergencies will start a domino effect.

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+1.  I agree with this post as well.

[Anonymous]

Don't think of available credit as emergency money. Credit lines can be used that way, but if you do you will have a very hard time getting your finances back on track. 

Having a high credit limit is nice. I can pay a large unexpected bill that I might not be able to cover with the 2-3 months of income I keep in my savings account. But it gives me time to move money out of my investment accounts to pay my bills. I don't think of my credit lines as a way to pay the bills in an emergency. I think of my credit lines as a convenient way to pay my bills or, in case of an emergency, as a temporary way to cover bills till I can gain access to funds that are less liquid than a bank checking/savings account. 

Save an emergency fund. Credit cards are not a substitute. Credit cards are super convenient. The rewards programs can be great. Credit in general is wonderful to have. But treating a credit limit as your emergency fund is never a good idea. If you have no other choice, you have to do it, but I'd sleep very badly after using my credit card that way. As others have stated, maxing out your card could result in a chain of account closures that might keep you credit score low for a long time (since each closure reduces your limit and keeps your debt utilization high until you pay everything off). Simply put, using my credit card as an extension to my bank account (other than to ciover bills for a month or so) is not a good idea

You did state that you are contributing to an emergency fund, so that is good. Sometimes you might have no choice other than resorting to credit card debt, but when times are good we should do our best to minimize the chance we will need to do so in the future. 

[Kostya1992]

I have a similar feeling. This is also why I won't be opening anymore new credit at least until late 2015. I want high limits with LOW APR.

A scenario that I see is that I have 2000 cash (emergency fund) and 20000 in credit limits. I can use these limits and make minimum payments with my emergency fund until I am out of whatever situation I am in. That definately adds to my sense of "security." But more importantly, the need for low APR cards.

[gingerflower]

+1 totally agree...

[MarineVietVet]

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@RobertEG wrote:

Looking at the flip side of the coin, i.e., how creditors view higher CLs, therir data shows that, on the average, consumers will spend more when their credit limit is increased.

Thus, they grant CLIs, not to help consumers, but rather to fatten their wallets.

It is great if you can obtain a CLI, and yet not increase spending.  Most consumers tend, when granted a CLI, to increase spending up to approx. their prior % util levels.

That is why creditors grant them, with the proviso, of course, that the higher limit is not considered an unreasonable risk.

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I've been guilty of this very thing.

[MidnightVoice]

I like having high CLs, as it means I can get big rewards when I have to spend big bucks (like the $450 worth of books from B&N wjen I got a new deck  )

But I have not asked for a CLI in about 5 years, and apart from a period when B&N Barclaycard went nuts, I don't think I have had an auto CLI in that time

[Imhotrodcrazy]

I like having large credit  limits too.  I never need  to worry about utility anymore.  I never have more than 1-2% now,  no matter what I buy.  I have received 40K on just 2 cards in the last 4 months,  so I am greatful. 

[taxi818]

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@RobertEG wrote:

Looking at the flip side of the coin, i.e., how creditors view higher CLs, therir data shows that, on the average, consumers will spend more when their credit limit is increased.

Thus, they grant CLIs, not to help consumers, but rather to fatten their wallets.

It is great if you can obtain a CLI, and yet not increase spending.  Most consumers tend, when granted a CLI, to increase spending up to approx. their prior % util levels.

That is why creditors grant them, with the proviso, of course, that the higher limit is not considered an unreasonable risk.

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+1. i agree. those high cl's are false sense of security. but if op sleeps better. good for op.

for me cash is King. even under the mattress. but it will run out. then i can use credit. but if its that bad. then the rocky bottom will be home.

seriously. i agree. they give limits so you can spend more.example. cap one. just gave 3500 increase. instead of 20 percent for cash advance. they said i can use entire amount of Cl for cash advance. i called them to confirm. they said yes and pin number is on the way. who does that. unless they want me to spend. but i will never ever use it. period.unless. hitting the rocky bottom of the creek as other poster said.