Why do people request such high credit limits?

[Anonymous]

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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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Because people like the idea of walking around with a million dollars in their pockets.   I wouldn't consider 7k to 10k high. Once you start getting over a 30k limit on a card you are getting into high limit territory. 

I do put 5k to 7k on my cards each month. Even though I pay in full each month a 3k card is kind of a hassle.  And I have had those small limits when trying to meet a sign up bonus and half to pay several times a week. Not fun. 

[derboesekoenig]

If you think 3k is high, you probably need to reevaluate your life.

[Anonymous]

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@Anonymous 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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Because people like the idea of walking around with a million dollars in their pockets.   I wouldn't consider 7k to 10k high. Once you start getting over a 30k limit on a card you are getting into high limit territory. 

I do put 5k to 7k on my cards each month. Even though I pay in full each month a 3k card is kind of a hassle.  And I have had those small limits when trying to meet a sign up bonus and half to pay several times a week. Not fun. 

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Makes sense.... I only put $500-1,000 through my credit card each month. For me to have a $7,000-10,000 limit (given my monthly spending), would be ridiulous. Even though i'm a disciplined spender, I wouldn't trust myself. 

[Anonymous]

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@Anonymous wrote:

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.... I only put $500-1,000 through my credit card each month. For me to have a $7,000-10,000 limit (given my monthly spending), would be ridiulous. Even though i'm a disciplined spender, I wouldn't trust myself. 

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That's a great point.  The oracle at Delphi told any visitor to Know Thyself.  That is still wise advice nearly 3000 years later.  If you feel that having a CL that is substantially higher than your monthly spend (e.g. ten times higher) puts you at risk of running up debt, then that issue trumps anything else.

One reason it becomes the deciding issue is that that it is easy to spend three times your total credit limit every month on your credit cards and still have a reported utilization of under 5%.  E.g. total credit limit of 2k and monthly spend on your cards of 6k.  Feel free to ask if it is unclear how to do that.

[Anonymous]

Do you pay down your card before the statement cut date?
At $500-1000 spend a month on one (your only) card with a CL of $3k your individual and overall utilization would be pretty high otherwise...

[Anonymous]

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@Anonymous wrote:
Do you pay down your card before the statement cut date?
At $500-1000 spend a month on one (your only) card with a CL of $3k your individual and overall utilization would be pretty high otherwise...

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Yes, I pay down most of the balance before the statement cut date. My utilization rate is usually 1-3%. Being unemployed between January-March of this year drained my savings, but I used to treat this like a debit card (pay off balance every few days). I prefer to have savings to pay for unexpected expenses, instead of putting it on a card. (Sometimes life doesn't give you that option, I carried a balance for a while this year). 

[dynamicvb]

I had asked this question a while back and created a little stir. I did not understand it at the time, but the main reason for most was for those times when you need to run a little balance. I just dealt with Hurricane Micheal and as a result, I've spent a good bit more than I had planned this month. Most of it will come back to me in insurance payments, but its actually nice to know I spent more on the cards than I would have liked and still have a fairly low utilization rate on my Discover where most of the spend has went. I'm actually glad they have bumped me up to a decent limit.

[Anonymous]

Sorry to hear you were affected by the hurricane, that was a massive storm! I asked this question a while ago and recieved quite a few responses. I appreciate the feedback and learned some new things.

I'm still not convinced a higher limit would benefit me, but every situation is different. I actually rip-up/shred credit card offers in the mail all the time. It's theraputic for me. (I'm sure the forum members want to "vote me off the island" for doing such a deed). 

[dynamicvb]

Everyone runs this marathon by themselves, so do what makes sense to get you to the finish line.