@Anonymous wrote:
Our friend Brutal Body Shots reminded us on another thread that when the individual credit limit on a revolving account gets high enough it can cause the entire account to be dropped from utilization -- which in turn could lead to a significant change in your CC utilization Thus, for example, the following is conceivable:
* Bob has had an Amex credit card with a 14k Credit limit for a long time, which typically reports a couple hundred dollars.
* He applies for a new card and gets a 5k limit.
* He then makes a softpull CLI request to triple his limit. His CL is now 42k
* A few days later, he puts a 3k purchase on the new card.
* Bob's CC utilization has gone from 1% ($140/$14000) to 60% ($3000/$5000)
That reminded me of the question I ask at the top of this post. I had been wondering about that for a while. Namely....
Is there any practical advantage from trying to raise the credit limit of any particular card past (say) 29k?
Assume that we are not talking about a consumer who needs the card for huge monthly business expenses, or a person who engages in MS (Manufactured Spending), or someone who is outrageously wealthy and might easily drop 30k on a pleasure trip to the Bahamas. Just a regular guy with an income of under 200k.
One use that does occur to me would be if auto dealers are typically ok with you using a credit card to buy a car. If so, then have a Citi Double Cash with a 60k limit would be nice. You could buy a 50k car and get $1000 back tax-free (assuming you paid it off the following month).
Do auto dealers let you do that? Can anyone think of any other practical use for a single CL that is absurdly high?
My feeling is that once you start getting close to having a single tradeline with a CL over 29k, by that time you almost certainly have at least 4-5 credit cards of different rewards types. And once you do, it means you are already using one card for groceries, another for gas, a third for restaurants, a fourth for airfare and hotels, etc. Aside from that example I gave about buying a car, I am having trouble imagining the use for a single tradeline that is particularly big.
Curious to hear if anyone else has ideas.
The danger in the line of thinking here is that a higher credit limit necessitates larger purchases, and that's just simply not always the case. I like the security, reward, and convenience of being able to put all purchases on cards then paying the statement balance each month. This means I want a credit limit sufficient to cover any expense or combination of expenses up to my spending ability (sum of my checking and traditional savings balances). It does not mean I plan to or have a desire to spend that amount in a month, let alone on a single purchase.
I don't like having a lot of cards, so I only keep 3 cards: two Visas for 99% of my purchases and a MC for the occasional gas purchase or when Visa isn't accepted. Both Visas have a CL of 50k. In the last 3 years, I have only made one purchase of $10,000 or higher, and I have made around 5 purchases of $3,000-$7,000 each. Because I have sufficient limits, in none of these cases did I have to write a check, put a purchase on a non-preferred card, or split a purchase across multiple cards. I was also able to make such a purchase one day then continue with my regular purchases the next day without worrying about hitting a limit or making more than my usual monthly statement balance payment. For me, that is the practical value for such limits - I don't have to change my routine, even when the non-routine occurs.
