If paying a credit card in full all the time and keeping it under 25% why do they increase the limit

thebarber

Hi. About 6 months ago i started saving and now have 6k and wanted to get a credit card to build my credit. when i used the elagabilty calculator for no credit history i got offered a card for ccj and default at around 24% and a marbles card around 34% for building credit so i took the marbles as i dont have ccj's.

I have never had a credit card before and heard that you can somehow set up to clear in full each month and also should aim to keep it under 25% of the limit.
My plan is to move my savings to a current account and direct debit from that to clear the card in full each month and to use it everyday for everything and once a month transfer The amount from my account i get wages in to top my savings back up to 6k this allows me to always have plenty in the account just in case. 
If a card for building credit and i clear it each month and keep myself under 25% then why do card companies up the limit as im not close to the limit they already set?
Keeping it low they can clearly see im using the card to build credit so why do they bother upping it?
Is it something they have to do? Also if they increase it how often does that happen? Because if i start very low say £400 limit that will mean i can only use it for some of my shopping each month before i have to switch to my bank card. Later is there any point to getting more cards at all if i dont need them does it build credit faster to have multiple cards. My end goal is either a mortgage or a large loan for a house boat as they are much cheaper but problematic as i dont know how easy it is to get a 100k loan between two people. Im 42 and save 1k a month because i houseshare and dont eat alot
Thanks for any replies.
Jason

D3xt3r5L4b

There’s a lot of questions there.
In short yes clear the card in full each statement month.
Forget about utilisation as you’re clearing in full so it doesn’t matter. 

Not sure I understand the part about moving savings around to cover the payment though?

cymruchris

If they are increasing your credit limits - then that shows they are beginning to trust you more as a customer. Having larger credit limits is useful when it comes to a mortgage application, as it shows that you are a responsible borrower, assuming you've continuously been paying the balance in full every month by direct debit.  You'll unlikely get a £100k personal loan for a house purchase - that kind of figure needs a mortgage if you're on an average wage, whether you eat a lot or not.

Socajam

It's good that you can save 1K a month.  I would continue saving the 1K and try not to overspend on the cc.
It's very easy to overspend, then before you know it, you have a huge debt and have to use your savings to repay the cc.
You have a goal in mind, and you can only reach it by saving as if the devil is on your back - good luck.

LordSomebody

Limits increase in the hope you use the card more each month (even if still 25% and paid off in full). Remember credit card companies take a tiny cut of what you buy from the seller. Even paying off in full, you’re making them money.

thebarber

D3xt3r5L4b said:

There’s a lot of questions there.
In short yes clear the card in full each statement month.
Forget about utilisation as you’re clearing in full so it doesn’t matter. 

Not sure I understand the part about moving savings around to cover the payment though?

Thats great to know i thought utilization would be an issue even if im clearing it each month but i guess not. Thanks

thebarber

cymruchris said:

If they are increasing your credit limits - then that shows they are beginning to trust you more as a customer. Having larger credit limits is useful when it comes to a mortgage application, as it shows that you are a responsible borrower, assuming you've continuously been paying the balance in full every month by direct debit.  You'll unlikely get a £100k personal loan for a house purchase - that kind of figure needs a mortgage if you're on an average wage, whether you eat a lot or not.

Thats really helpful. I dont think they do mortgages on house boats so i guess i will have to focus on bricks and mortar which is way more expensive or go for a narrow boat in 2 years and buy outright but i liked the barge boats

thebarber

Socajam said:

It's good that you can save 1K a month.  I would continue saving the 1K and try not to overspend on the cc.
It's very easy to overspend, then before you know it, you have a huge debt and have to use your savings to repay the cc.
You have a goal in mind, and you can only reach it by saving as if the devil is on your back - good luck.

Cheers for that i dont think overspending is an issue i have everything i want and dont spend the 6k in my account i just want to use the CC for food and bills each month. thanks again