Credit Card Limits?

AFK_Matrix

Hi there,

Just a quick question really. I have had a 0% Super Balance Transfer Card before and I got a 4k limit on this and assumed this was because I also have a normal Credit Card with a 4k limit, but I'm not sure.

So if I wanted more of a limit is it worth upping my normal credit card limit or are the limits set against something completely different? It really would be handy to know what limit your going to get when applying lol.

Cell

Totally unrelated, so likely to be pure coincidence.

In fact in theory the more credit you have available on your existing card/s the more likely it is that you'll get a lower credit limit on a new one.

Anthorn

Cell wrote: »

Totally unrelated, so likely to be pure coincidence.

In fact in theory the more credit you have available on your existing card/s the more likely it is that you'll get a lower credit limit on a new one.

It's the other way around. It's the amount of available credit used although available credit is a factor but to a lesser extent. For example if a lender decides that your overall available credit should be £10,000 and your available credit (limit) is £10,000 but your credit history shows that you only ever use £5,000 of that then it may decide that an additional credit limit of £5,000 is reasonable.

Cell

Or it might 'think' that if someone only ever uses £5,000 out of £10,000 then it's less likely that the credit they allocate would be used, or earn them money.

No guarantees either way of course. It depends on the individual lenders' policies.

But back-tracking to the original post, the fact that the OP received the same credit limit as the card he or she already had is going to be pure coincidence.

If the OP does increase their credit limit with the original card then it may take a few weeks to filter through to the credit agencies in any event. And their algorithms might be programmed to wonder why the applicant is increasing credit availability on an existing card and also applying for a new one.

EDIT: Having re-read the original post there isn't any mention of a new card. Indeed my scrambled brain isn't quite sure what he/she is actually asking.

Time for bed Zebedee!

Anthorn

Cell wrote: »

Or it might 'think' that if someone only ever uses £5,000 out of £10,000 then it's less likely that the credit they allocate would be used, or earn them money.

Could be but not necessarily. Any credit card company worth it's salt would work on the premise that you have the ability to make the payments on £10,000 but you only have £5000 so £5,000 is up for grabs. Remember that credit card companies and banks are in competition with each other and all of them view you in terms of potential profit.

In answer to the OP's question on whether to up a credit limit on an existing card or to get a new card: Depends on how impatient you are to get it. Usually over the short term you will get more of an overall limit increase if you take out an additional card than if you waited for a limit increase on an existing card. But that depends on how the credit card company or bank view your application for a limit increase and how quickly they process it. Overall in terms of accounts on your CRA file more is better.

bigadaj

There are several things at play here, many working against each other.

I have a range of cards with limits between £1500 and £15000, so different views of providers and of course for different purposes.

So there is an incentive for a higher limit in terms of interest earned or more probably merchant fees for many, this is counter balanced by the risk of default or financial difficulty but also the need for capital to offset the available balance, for which the bank must account particularly since the gfc.

There are broad guidelines in terms of available credit and credit use age, probably better to first think why you want a higher limit.

Also certain providers offer higher limits, mbna being one obvious example.