Unnecessarily high CLs?

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whit
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Re: Unnecessarily high CLs?

Postby whit » Sun Jun 14, 2015 5:31 pm

Vermonster wrote:I would disagree. While most of us see Credit cards, as you said earlier, as a way to make a small percentage back on purchases that you are going to make anyway, there are other reasons to use them.

I sent my car to the shop and it quickly turned into a $5000 bill. New engine plus a few other little things quickly adds up. I was in the middle of school, and my boss had just moved across the country, so I was now in charge. The last thing I need to think about was whether I had enough money in my checking account to pay for this all. Putting everything on the credit card meant I could pay one bill at the end of the month and figure out where the money was coming from after I got my car back on the road.

In our current situation, not having one of our two cars leaves us with either a $300/week rental, or a $0 per week paycheck. Maybe I'm alone here, but I think credit cards are by far the best option for emergency use. A few extra dollars in interest is sometimes better than the alternative.


I like how you take my words out of context with the simple cut when quoting so I am quoting you entirely.

You mentioned that you didn't want to think about how you were going to pay for the entire bill at once but rather worry at the end of the month and that's exactly how credit cards work. You purchase something and within a grace period you can not worry about paying it off whether you have the funds in the bank or coming in a paycheck

Otherwise it would simply be a debit card

And I would strongly advocate against the latter because it's a tough hole to dig out of once in.

There's no judging on my part of people who carry balances on Credit cards for whatever reason--I would never say that there is no reason people should carry balances on credit card

Life happens, we know that.

However, more and more folks are not able to put aside money to save, that's scary in of itself.

But I think if people even had the means they don't think they do, because certain things are essential to them and I guess that's where it gets sticky

Because not everyone has the discipline to do so

I'm a huge fan of things well made and that comes at a high price unfortunately.

So instead of spending money on cable, fast internet or expensive electronics I limit myself to a tv with public channels, $10 internet and a two year old iPad and iPhone.

I put x amount of money aside every paycheck that if at the end of the year I don't touch because I was able to budget well and not get into too much emergency trouble--I take that money and I treat myself something nice, or I roll it over to next year.

I do that because after trying to put aside money myself it is HARD. If money is in my checking account; I will spend it through my cc.

Which is why I have my direct deposit split three ways so that helps me discipline myself better.

I can't stress enough for folks to save, and not resort to taking equity out of houses, or doing reverse mortgages, unless it's absolutely absolutely necessary. Like you cut so far down you're eating rice and beans for breakfast, lunch, and dinner alternatively between the two.

Just my two cents but whatever folks wanna do, they'll do


Vermonster
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Re: Unnecessarily high CLs?

Postby Vermonster » Sun Jun 14, 2015 8:49 pm

whit wrote:I like how you take my words out of context with the simple cut when quoting so I am quoting you entirely.


I quoted only what was necessary to make my statement. I took nothing out of context in relation to having a card with a high limit. You mentioned budgeting and your own personal experience with credit, neither of which was important to the point I was making.

I don't particularly care to discuss my budget or anyone's budget. The truth is we live in an era where 50% of American's have less than $10k in savings. Some of this can be fixed with budgeting, some of it can't. But the desire, need, advantage or disadvantage of a card with a high limit is not and should not be influenced by the presence of a budget.

I personally believe that it is nice to have a credit limit higher than your expected monthly spend for those times that "shit happens." If you need $20k to make that happen then so be it. I personally like a limit at least 3 times greater than my monthly spend. But I also know that not everyone is in my situation.
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Re: Unnecessarily high CLs?

Postby rockyrock » Mon Jun 15, 2015 8:35 am

I think about this all the time. I have a few cards that have never seen the light of day and I only keep them to have the available credit. My total availability is >$125k and that doesn't include my PRG. Right now I have some BT that I am paying down so I'll keep it where it's at so my ratio stays good.

I think the Marriott card is done. It has my highest limit at $32k i think. I'll move as much of that to my Freedom as possible before I close it. I hate to close it as it is one of the cards that is older than my AAOA.... My USAA Amex still has the activation sticker on it...USAA won't shift so if I close it, that $16k is gone. It's a free card so I'll just keep it open for now.

My signature is afu btw. The "new and improved" forum limits the characters for signatures so I can't change it without losing the format. My CSP is now a Freedom and I've added a Citi AT&T Access More.

At one point I was trying to collect as much availability as I could. Now I'm looking to reduce it in a way that won't hurt my score.
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takeshi
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Re: Unnecessarily high CLs?

Postby takeshi » Mon Jun 15, 2015 8:52 am

CarefulBuilder14 wrote:I don’t totally get why the focus on high CLs is so common. Getting a higher CL on a card you don’t use much seems very counterproductive. It doesn’t take very many $10k+ CLs to quickly put most people into the “too much available credit” category where they can get declined despite an otherwise good application.

If that becomes an issue then one can deal with it by closing out accounts. IMO revolving utilization is a bigger concern. My highest limit card only sees about $200-$300 in spend each month so worst case it reports with 1% utilization and helps with overall utilization as well.

If you don't get it you don't have to follow along with what seems popular. It's up to each to act on what works for the individual. Have you actually run into "too much available credit" as a denial reason?

CarefulBuilder14 wrote:Unless you have a commensurate income, isn’t a high CL on a card you don’t use much just kind of dead weight?

Not necessarily. I'm carrying balances on 0% offers so some of my cards that see no spend are helping to offset those balances and keep my overall utilization under 10% without any micromanagement. However, if those unused cards were preventing me from getting the cards that I needed/wanted I'd ditch them.

Again, each has to assess these things for his/her self. If you are getting "too much available credit" and could leverage the credit elsewhere then it may be dead weight. If not, it probably isn't.

CarefulBuilder14 wrote:The rewards/bonus/perks game is a lot more fun.

They're not mutually exclusive.

CarefulBuilder14 wrote:If someone has $20k of available credit on a Macy's jewelry card, and other cards give that person a high available credit to income ratio, then that one almost-useless account could crowd out 4 useful $5k cards.

But does that person need/want 4 more cards? The other problem with this statement is that you're assuming that all creditors are willing to extend the same amount of credit for a given credit profile. A 20K card does not necessarily equal four 5K cards or any other permutation.

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Re: Unnecessarily high CLs?

Postby CarefulBuilder14 » Mon Jun 15, 2015 3:50 pm

rockyrock wrote:My signature is afu btw. The "new and improved" forum limits the characters for signatures so I can't change it without losing the format. My CSP is now a Freedom and I've added a Citi AT&T Access More.

At one point I was trying to collect as much availability as I could. Now I'm looking to reduce it in a way that won't hurt my score.

As far as the signature, I find card abbreviations are a must. It does make things confusing for new people, though. It look me a while to figure out what "CSP" meant when I joined.

Have you been declined for cards you've wanted for having too much available credit? Or you just find you don't need it/that AF doesn't make sense for you?
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CarefulBuilder14
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Re: Unnecessarily high CLs?

Postby CarefulBuilder14 » Mon Jun 15, 2015 4:22 pm

takeshi wrote:
CarefulBuilder14 wrote:I don’t totally get why the focus on high CLs is so common. Getting a higher CL on a card you don’t use much seems very counterproductive. It doesn’t take very many $10k+ CLs to quickly put most people into the “too much available credit” category where they can get declined despite an otherwise good application.

If that becomes an issue then one can deal with it by closing out accounts. True. Having AAoA grow more slowly isn't too big a deal. My point was more that it's sometimes not a smart direction to go in - not that you couldn't come back from it. There's also the concern that closed accounts can make a person look like a bonus chaser. IMO revolving utilization is a bigger concern. My highest limit card only sees about $200-$300 in spend each month so worst case it reports with 1% utilization and helps with overall utilization as well. I can see how that's useful for you.

If you don't get it you don't have to follow along with what seems popular. I won't for this! :) It's up to each to act on what works for the individual. Have you actually run into "too much available credit" as a denial reason? Only in the case of a smaller-than-requested Chase CLI about a year ago. I think my limited history was a bigger factor, rather than my income. I've read cases on here and MF of other people encountering it. I've not been denied credit outright for over a year, but my new CLs are getting smaller, rather than bigger. Internal limits (for a reasonably short history) could also be a factor, since my last three cards have been a 3rd Amex, 2nd Barclaycard, and 3rd Chase.

CarefulBuilder14 wrote:Unless you have a commensurate income, isn’t a high CL on a card you don’t use much just kind of dead weight?

Not necessarily. I'm carrying balances on 0% offers so some of my cards that see no spend are helping to offset those balances and keep my overall utilization under 10% without any micromanagement. However, if those unused cards were preventing me from getting the cards that I needed/wanted I'd ditch them. I guess so. Interest rates are lousy, though, so for me it's worth the simplicity to just PIF. Maybe I'll not PIF my $1.7k of $4k on Arrival. **Edit: Actually, I checked again and there's no intro 0% period, so PIF it is!** Amex seems to like to give AA for non-PIFers, and Chase IHG has no 0% period, so I'll just PIF those.

Again, each has to assess these things for his/her self. If you are getting "too much available credit" and could leverage the credit elsewhere then it may be dead weight. If not, it probably isn't.

CarefulBuilder14 wrote:The rewards/bonus/perks game is a lot more fun.

They're not mutually exclusive.

CarefulBuilder14 wrote:If someone has $20k of available credit on a Macy's jewelry card, and other cards give that person a high available credit to income ratio, then that one almost-useless account could crowd out 4 useful $5k cards.

But does that person need/want 4 more cards? The other problem with this statement is that you're assuming that all creditors are willing to extend the same amount of credit for a given credit profile. A 20K card does not necessarily equal four 5K cards or any other permutation. This is true. One lender may be uneasy if someone has 100% credit-to-income, while some credit unions popular on MF seem comfortable with 400% credit-to-income. If someone has 400% available-credit-to-income through opening a lot of cards they don't need, then it could prevent them from getting great cards that have a more conservative credit standard.
Last edited by CarefulBuilder14 on Tue Jun 16, 2015 12:39 pm, edited 1 time in total.
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ingramjuan
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Re: Unnecessarily high CLs?

Postby ingramjuan » Mon Jun 15, 2015 7:34 pm

I guess I can see your point. For me since my job doesn't supply me with a cc and I have to do a monthly expense report my goal is to have the highest CL as possible without affecting my CS due to work. Also with getting my business off the ground a higher CL is defiantly needed until I leave my fulltime job. I guess it just depends on what's going on in a person life.
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MemberSince99
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Re: Unnecessarily high CLs?

Postby MemberSince99 » Tue Jun 16, 2015 7:30 am

I'm honestly just not sure how a CL can be defined as "unnecessarily high". I guess if it really bothers a person, just ask them to cut it. Otherwise, I don't see the issue.

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Re: Unnecessarily high CLs?

Postby CarefulBuilder14 » Tue Jun 16, 2015 11:11 am

MemberSince99 wrote:I'm honestly just not sure how a CL can be defined as "unnecessarily high". I guess if it really bothers a person, just ask them to cut it. Otherwise, I don't see the issue.

A CL can be unnecessarily high if...

1. A person already has very low overall utilization,
2. That person gets no real benefit from having an enormous CL on a certain card,
and
3. That person's large amount of available existing credit on somewhat useless cards prevents that person from getting an approval (or good terms) on a potential new card that would be a lot more useful.

Requesting a lower CL is certainly a good solution. For people intent on simultaneously having all the different kinds of Macy's store cards (4?) it would be blasphemous, though.

ingramjuan wrote:I guess I can see your point. For me since my job doesn't supply me with a cc and I have to do a monthly expense report my goal is to have the highest CL as possible without affecting my CS due to work. Also with getting my business off the ground a higher CL is defiantly needed until I leave my fulltime job. I guess it just depends on what's going on in a person life.

And that's a totally valid reason for needing a high (or soft) CL on cards. I was really more focused on people with gigantic limits on cards they don't even really need in the first place - people who get cards just because they have a reputation of coming with high CLs and just focus on total CL as the most important score in the credit game they play.
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Re: Unnecessarily high CLs?

Postby JonE » Tue Jun 16, 2015 10:29 pm

I suppose in my case I'd rather have four cards with the lowest limit being $5k or $10k than have 10 or more with the lowest limit being in the hundreds. A scenario like this maybe:

Card 1 - $10000
Card 2 - $7500
Card 3 - $15000
Card 4 - $12500

That would definitely work for me as long as the liquid assets are up to snuff, don't want to spend 10 years paying down a large balance on one of those.
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