Why do people request such high credit limits?

[Anonymous]

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@Thomas_Thumb wrote:

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@Anonymous wrote:

I see lots of people that have multiple credit cards with extremly high credit limits, such as $7,000-10,000.

What is the benefit of having multiple cards and high limits? (besides rewards points/cash back/emergency fund).

(I'm 25 and have a FICO score around 760. I have one Travel Rewards Visa through my Credit Union. My new credit limit is $3,000, which seems ridiculously high to me.)

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For many it is simply "because they can".

Beyond a certain point there is no real justification based on personal need or lowering of utilization. However, nothing wrong with high limits for those that manage credit responsibly.

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Good points. Personally, I wouldn't want to manage/keep track of multiple credit cards. I'm satified with my FICO/credits score- only a longer credit history and the droping of hard inquiries will help my score. To each his own...

[Anonymous]

When I was younger, I could see this being true in terms of what I needed. But learning what I have in these boards, I found it's also important to keep in mind where you want to be later. Later, I found value of having getting a backup credit card (whoops, guess I never activated the replacement card!) or a card with significantly better rewards, protections, etc. than my starter card. Inquiries don't matter after a year, but a drop in length of credit history can take years to get back. If not for my student loans, with only one credit card my history would have taken quite a hit. Just something to keep in mind.

[Revelate]

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@SouthJamaica wrote:

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The advantages of having  high credit limits are (a) the credit is there if you ever need it, without the need to apply for it and (b) if you allow one or more balances to report, your utilization will be lower if the limits are higher.

I am not aware of any disadvantages of having high credit limits.

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I don't really think there are in the current credit market... but 2008 was a scary time financially and big honking credit lines were almost assuredly more liable to get slashed or closed (lazy lenders) than a smaller limit card.

Whenever we get back to such a time the algorithms are likely going to start looking at things like total limits for a consumer, and quite likely simply close it and let them be someone else's risk: I suspect we see that still though it's hard to tell if we're getting complete stories here sometimes.  Fact is most people don't have absurd limits, and those of us that do, are the outliers.

Being an outlier is not where we want to be when the banks come looking... but rationally, I ain't skeered: pretty sure unless I file for a BK, I'll be able to keep my Chase lines open in some form or fashion, and the Amex Zync isn't going anywhere nor is the DCU secured card, so I'll be OK.

[Anonymous]

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@SouthJamaica wrote:

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@Anonymous wrote:

I see lots of people that have multiple credit cards with extremly high credit limits, such as $7,000-10,000.

What is the benefit of having multiple cards and high limits? (besides rewards points/cash back/emergency fund).

(I'm 25 and have a FICO score around 760. I have one Travel Rewards Visa through my Credit Union. My new credit limit is $3,000, which seems ridiculously high to me.)

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The advantages of having  high credit limits are (a) the credit is there if you ever need it, without the need to apply for it and (b) if you allow one or more balances to report, your utilization will be lower if the limits are higher.

I am not aware of any disadvantages of having high credit limits.

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I agree with South Jamaica 100%.

[Anonymous]

I have not tried the Nitro yet but it's on my list!

[tacpoly]

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@Revelate wrote:

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@SouthJamaica wrote:

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The advantages of having  high credit limits are (a) the credit is there if you ever need it, without the need to apply for it and (b) if you allow one or more balances to report, your utilization will be lower if the limits are higher.

I am not aware of any disadvantages of having high credit limits.

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I don't really think there are in the current credit market... but 2008 was a scary time financially and big honking credit lines were almost assuredly more liable to get slashed or closed (lazy lenders) than a smaller limit card.

Whenever we get back to such a time the algorithms are likely going to start looking at things like total limits for a consumer, and quite likely simply close it and let them be someone else's risk: I suspect we see that still though it's hard to tell if we're getting complete stories here sometimes.  Fact is most people don't have absurd limits, and those of us that do, are the outliers.

Being an outlier is not where we want to be when the banks come looking... but rationally, I ain't skeered: pretty sure unless I file for a BK, I'll be able to keep my Chase lines open in some form or fashion, and the Amex Zync isn't going anywhere nor is the DCU secured card, so I'll be OK.

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I think you would still have had to display risky behavior, credit-wise, for banks to slash limits or close accounts. I went through the dotcom bust and the Great Recession with credit limits with Chase, Citi, and B of A (each over 40K) untouched.  

I distinctly remember, in 2009, having to call in with a $20K+ payment because I was 1 day late (I had a lot going on). The Chase rep waived late fees (and interest, too I think) because I’d never been late before and always paid in full. 

To the OP, I have high limits to cover instances of high spending.  And after learning about utilization here, I no longer turn down limit increases. 

[Anonymous]

Limits never (relatively) get slashed just because they're high.  There's always a more important reason why, including but not limited to:

1 - The introduction of negative information to your CR and it doesn't have to be on the account that's in question of getting the CLD.

2 - Not using a significant portion of your high limit.  Cap One for the past year has been taking lots of > $10k limits down to $10k for this reason.

3 - Letting a card sit idle for a length of time without using it.

4 - Sitting at very high utilization for a length of time, an indicator of increased risk.

5 - Any other action that may be perceived as increased risk... such as taking on a bunch of inquiries and opening a ton of new accounts.

[ScoreSizzle]

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@Anonymous wrote:

I have not tried the Nitro yet but it's on my list!

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Better get on it! 

DELICIOUS!

[mitchblue]

I think everyone should have at least 1 high limit card. If just for those oh sheet moments. Life happens and a high limit can help.

[Roarmeister]

$7 - 10,000 is not an extremely high limit.  The lowest initial credit I've ever received was $1500 and that was 25 years ago.  I've got three cards that actually started with a $20k limit and I have been increasing their limits because the CCCs have been bending over backwards trying to lend me money.  And I'm only a simple middle class (and middle-aged) guy with a steady job.  My top card has a $36k limit - I didn't ask for the last increase and didn't "need" one but they wanted to entice me to use more credit from them so I agreed to the increase.  I also take advantage of moving my credit around to get the lowest interest rate; I am currently paying 1% for the majority of my CC credit and 0% on my auto loan.

Why?  Because I'm gaming the system and making it work FOR me.  The credit card companies and banks made the rules and I'm living with them.  20 years ago, a CCC screwed me and duped me out $650 on one of those "car credit saving" cards because I missed 2 payments in a row.  So now is my chance to make credit work to my advantage.  The high limits are a result of good credit gardening and using my credit responsibly.  I haven't missed a payment in 15 years and only apply for credit when it will help me.  A total high credit limit means that I have a low utilization which in turn nets a higher credit score.  I temporarily increased my credit owing but as I whittle that back down to a very low number my utilization will go lower and I will get an incrementally higher credit score.  In some ways, credit scores are just a game when you are above 800.  In fact, I was a little miffed when 3 credit lines reported this month (albeit with 2 small charges) instead of the normal 1 - and my score dropped 15 points to 858.    But that will bounce back.