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I have a rewards card and use it like cash to reep the benefits. It is a Disney card...two years ago 6 of us went to Disney for 4 days completely paid for (meals, tickets, hotel), I had to buy the plane tickets, but well worth it. We use the card for everything but pay it off each day online so at the end of the month I have a zero balance statement. I purposely keep a low limit ($3000) because there is no need to hurt my debt to income ratio just to have a higher credit limit that I dont need. A few months ago I purchased a car with my credit card and I called to raise the limit on the card while I was at the dealership. A week later the card was paid off and I lowered my limit again. I get things in the mail for ridiculous credit limits with this card and that card, but I choose to keep one card with a low limit. My wife and I have excellent credit and I dont want to be bothered by an unfavorable debt to income ratio.
Location: 23.7 million to 162 million miles North of Venus
23,509 posts, read 12,509,523 times
Reputation: 10456
Quote:
Originally Posted by Blackbeauty212
My highest limit is on my Citi Thank You Premier which is 30K....my lowest is 5k on three cards I barely ever use....
High limits are good for Utilization %....for instance I do carry balances on big ticket purchases when I can lock in a 0% rate period and Citi is pretty good to give me a 6 month offer when I request it. So spending 3K on my 30k card is more optimal for my Utilization that putting that same 3k on one of my 5K cards which would then adversely affect me as than card would report me being "Maxed" out (75% or more of the cards limit)..
So have 2-3 very high limit cards is optimal.....You also don't want to have Too Much Available credit....i.e. greater than 50k credit lines on more than a couple of cards. I dont understand giving people that high of a limit anyway anything after 20k should be treated just like a Charge card with NPSL.
A $50k credit limit for many people who make a half million, a million, or more a year would be about as worthless in not only usage but also in terms of utilization as your $5k cards utilization is to you.
I've always been curious as a soon to be college grad considering continuing with an MBA in finance, about credit card trends in the US. In otherwords, are a lot of americans walking around with like 3-5 chase cards discover etc lol with HIGH credit lines like 20k+? Or is this a thing of the past (pre-recession)?
Also, what is a realistic limit to expect or ask for on first card. Ideally I'd like a limit no less (or more) then 10-12k. And 2 cards.
I have two cards with about $10,000 limit. I don't need that much, they will NEVER be maxed out and I pay what I do charge every month. I have them for emergencies but I also have a pretty healthy emergency fund so haven't had to use them for that. I also use them when I go on vacation/road trips but I already have the money in the bank to pay them off when I return. I try to use my credit responsibly and can't imagine ever needing a limit of $20,000+.
I have a rewards card and use it like cash to reep the benefits. It is a Disney card...two years ago 6 of us went to Disney for 4 days completely paid for (meals, tickets, hotel), I had to buy the plane tickets, but well worth it. We use the card for everything but pay it off each day online so at the end of the month I have a zero balance statement. I purposely keep a low limit ($3000) because there is no need to hurt my debt to income ratio just to have a higher credit limit that I dont need. A few months ago I purchased a car with my credit card and I called to raise the limit on the card while I was at the dealership. A week later the card was paid off and I lowered my limit again. I get things in the mail for ridiculous credit limits with this card and that card, but I choose to keep one card with a low limit. My wife and I have excellent credit and I dont want to be bothered by an unfavorable debt to income ratio.
I don't think having high credit limits means your debt ratio is higher. It is your credit utilization that affects your credit. I think you should visit myfico website because I think your rationale is wrong.
I don't think having high credit limits means your debt ratio is higher. It is your credit utilization that affects your credit. I think you should visit myfico website because I think your rationale is wrong.
Lenders do look at "available credit" when evaluating, because the of the potential to go overboard on what your budge can handle could put in jeopardy your ability to repay a loan. When we have done mortgage loans (with perfect credit!), each time we have been required to close a card or two that had a high available credit limit (which currently had zero balances). A lender does not want someone to go on a spending binge with their charge cards and then wreck their ability to pay off a loan.
Also, what is a realistic limit to expect or ask for on first card. Ideally I'd like a limit no less (or more) then 10-12k. And 2 cards.
Realistically you should expect under $1000. I just signed up someone for her first credit card (she's a 22 year old college student) and they only gave her $500. My first card had a $500 limit.
By the way, when you apply they don't let you ask for how much credit limit you want. They just give you whatever they think is right. After a couple of years of responsible credit usage you'll get bumped up to $3k~$5k. It's gonna take a number of years before any single issuer will give you a limit over $10k though.
Location: 23.7 million to 162 million miles North of Venus
23,509 posts, read 12,509,523 times
Reputation: 10456
Quote:
Originally Posted by Tom2020
Lenders do look at "available credit" when evaluating, because the of the potential to go overboard on what your budge can handle could put in jeopardy your ability to repay a loan. When we have done mortgage loans (with perfect credit!), each time we have been required to close a card or two that had a high available credit limit (which currently had zero balances). A lender does not want someone to go on a spending binge with their charge cards and then wreck their ability to pay off a loan.
I have almost 2 1/2 times my annual income in available credit. I have never had a lender deny me or demand that I close one or more cards because of "available credit". If I ever do, in the future, I'd tell them to have a nice day and go on down the road to a different lender.
Closing a card to get a loan could have repercussions, even with those that pay in full each month. If there is a balance being reported on one card and a person closes a different card, that doesn't have a balance, the card that is closed would still report but the credit limit would no longer factor in on the overall utilization. That may lower the persons credit score which could possibly bump them out of the loan or bump them up to a higher interest rate.
I have almost 2 1/2 times my annual income in available credit. I have never had a lender deny me or demand that I close one or more cards because of "available credit". If I ever do, in the future, I'd tell them to have a nice day and go on down the road to a different lender.
I've ample credit and enough charge cards that if I need to close an unused one, it is no big deal to me. I'll take the option of working with the lender that I already have lined up that offers a good financial loan package, great interest rate, and other things that are important to me over getting huffy about something that does not even matter to me and then needing to try to find another great loan package. I believe in keeping focused on my goal (good mortgage loan package) and not letting immaterial things blur my vision.
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