Such a thing as too much credit?

FreddieFrugal

I applied this Saturday for an AmEx Platinum everyday cashback card. Got an email yesterday confirming it and saying my credit limit will be £3000.

I also applied for a Halifax Clarity purely to use abroad. I know I was accepted but no further details yet, it gave estimated credit limit of £3000 as well at the time.

Then today I got letter from Capital One saying my credit limit on Classic Extra card will be increasing from £1100 to £2100.

Is this too much credit? Will it negatively affect me in future? Or is it fine to let it increase? Will declining credit limit increase affect me negatively?

I'd rather decline this increase if it makes it more likely ill get an increase on the AmEx at some point.

I was planning on keeping the CapOne as a backup for if I can't use AmEx and just use the Clarity on holiday and occassionally to stop it being cancelled in between yearly trips.

Any advice appreciated.

lisyloo

Is this too much credit?

Probably not, but it does depend on your income.
If you earn £60K then it's not a lot, but if you earn £10K then it's a lot.
Those are not big limits. I have £9800 from Halifax.

Will it negatively affect me in future?

Too much credit can negatively affect you but as I said it's relative to income, so we can't say, but they don't look like huge limits.
Having too many searches in a short space of time can be negative as well, because it can look like you are desperate. 2 isn't a big problem, but you should avoid loads of credit searches in a short space of time.

I'd rather decline this increase if it makes it more likely ill get an increase on the AmEx at some point.

It's not possible to second guess it at that level of detail. We don't know companies policies to that detail and if we did they can change.

Personally I don't think you should worry unless you're on a really low income.
If the total is less than say 50% of your income then I don't think you need to worry.

I would suggest you ring Halifax before you go on holiday and also take at least one back up card.

If you have safe wifi (NOT a shared computer) then you can make on-line BACS payments from your bank account right after you've made a cash withdrawal.
BUT the interest is very small for a few days/weeks so don't ruin your holiday to get this done.

Mulder00

I tend to disagree with the first response. I definitely think you can have too much credit! Because too much credit can easily lead to too much debt. Also, the amount of credit you have isn't only related to your earnings, but also spending habits.

It's nice to have all those limits, but if you don't need it, I say don't have it.

Also, it could negatively affect you as some lenders will look at your total available credit to judge whether you can take on more credit or not. You should have some, but find a balance!

FreddieFrugal

Thanks. My income at the moment is £21K. Household income is £43K.

I'm not worried about it in terms of going wild with too much credit either I should say, as we're both low spenders high savers. Hence wanting a cashback card.

CLAPTON

Mulder00 wrote: »

I tend to disagree with the first response. I definitely think you can have too much credit! Because too much credit can easily lead to too much debt. Also, the amount of credit you have isn't only related to your earnings, but also spending habits.

It's nice to have all those limits, but if you don't need it, I say don't have it.

Also, it could negatively affect you as some lenders will look at your total available credit to judge whether you can take on more credit or not. You should have some, but find a balance!

there are lots of things in life that can be 'dangerous' if people can't handle them.

many people on these boards have many cards with credit limits totalling 30-40,000 or more; they pay in full each and every month and never get into debt.

It depends upon one's circumstances and how much sense one has but a combination of cash back cards, ones good for overseas purchases/cash, ones that give 'rewards ' for specific shops etc can save significant money without any danger of debt.

lisyloo

Because too much credit can easily lead to too much debt.

This certainly isn't the case for everyone.
I agree that for some undisciplined people it can be bad, but some of us are really disciplined and it's not an issue.
Some of us do sometimes need big limits for either large purchases or sometimes business expenses.

I interpreted the question as being in the context of too much credit from a lenders point of view. This is relative to income and other factors such as age, whether you have a mortgage and your conduct e.g. late payment, defaults, minimum payments, cash withdrawals etc.

I personally don't think £8K is too much for £21K salary.
I have £20K on £50K salary so about the same ratio.
I don't have any issues getting credit and have heard of people with much higher ratios, but as I said other factors and account conduct comes into it too.

FreddieFrugal

Well I've declined the increase as I don't need it.

fozmcfc

I agree with Mulder, there is for certain people, a problem in having too much credit available, whether used or not.

Some lenders, may offer higher APR's, lower limits, or no credit at all, if a person has a lot of credit available, compared to income.

I have a lot of credit available to me, compared to my salary. But I think, that is largely down to my record being completely blemish free and I've never had any bad circumstances changes. Same main bank account, same job and same address for 25 years +, never go into my overdraft and have several long term credit accounts.

I daresay, someone on the same salary as me, without a steady long term job, address, bank account etc...would be seen differently.

I tend to close down cards or lower limits, on cards I'm not going to be using.

lisyloo

f a person has a lot of credit available

I agree with everything you've said, but it's not very cler what "a lot" means.
Up to 50% of income in unsecured credit does not seem to be a problem.

fozmcfc

For me I have roughly 75% of my yearly income, available to me in unused/used credit.

Until a couple of cards were closed, I had about 90%.

w211

When I applied for the American Express Platinum Cashback Card, they gave me a limit of £5,000. I've always repaid in full, with the average monthly balance being around £1,500. They have since increased the limit to £6,800, though it's obvious I won't be needing it.

However, I will be closing the card soon as I don't use it any more (I'm now using their charge card, as I find the rewards are of more value than the cashback).

I've also a Capital One Aspire World (to earn cashback for non-Amex spending), when applied for surprisingly gave me a £10,000 limit (which I believe is the maximum for that type of card) However my non-Amex spending is rarely more than about £200 a month anyway.