lobbythis wrote:This confuses me. Why would a lender, who is notoriously conservative, want to risk giving someone a limit almost 3x as high as any other card they currently have.
Discover being a conservative lender isn't really born out by their financial performance (they have much lower than normal default rate, and very good returns, among the highest in industry), or by some of their behaviors (They issue cards to people who have no traditional credit history.) It's mostly people complaining in forums that they didn't give them a huge limit just because they think they deserve one.
But the answer to why they'd do that is simple. It's the same reason banks do anything: they think doing that will make them more money than doing something else will. Maybe they think that having a big limit will encourage the customer to go run up bills, and pay interest. Maybe they think that giving a big limit will encourage the customer to use their card, and not some other bank's. Maybe the proprietary scoring system they use in house thinks the customer is a better credit risk than fico does. Or that system thinks that while they're not the best credit risk, they'll make them lots of money before they default.