Credit Card Limits - Too High?

Buzzbox

Is it bad to have a high credit limit on your credit cards?

Paul_Herring

Buzzbox wrote: »

Is it bad to have a high credit limit on your credit cards?

Depends.
1) How high is high? What is it as a percentage of your annual income?
2) How many cards?
3) What credit related activities are you likely to do in the next year or so? (Apply for other CC's, (re)mortgage?)
4) Do you actually use/are you likely to use the limit?
5) What do you mean by 'bad?'

Bismarck

Don't know really....depending on your needs (buy or shuffle) and your ability to trust yourself not to blow it I suppose.

Buzzbox

Well I have two credit cards, one has a limit of £5000 and the other £5500. I earn about £22500 annually....

I have aprox £1900 on one of the cards and £400 on the other, I make way more than the monthly payment each month. Paying off the debt I have on there is my first priority.

The reason why I am asking is because I read somewhere that it damaged your credit score to have a few credit cards with high limits. I do not have a mortgage or a car if that helps. Just don't want to mess up my credit score after I basically jumped through hoops to build it up.

marvin

When assessing if you should get credit or not providers look at the total credit available to you. (as well as the total you owe on them) I don't think having two cards with high limits but low balances owed are going to cause you much trouble with your income.

mygeorgie

My son has an Aqua credit card the APR on which is nearing 30%. He is overpaying every month and now only owes about £300. Is it worth asking them to reduce their APR now the balance has been greatly reduced, and what are the chances of them agreeing to this.
he has now paid off all his other credit cards and we want to try and improve his credit rating.
Any thoughts, comments tips etc greatly appreciated

exel1966

Buzzbox wrote: »

Well I have two credit cards, one has a limit of £5000 and the other £5500. I earn about £22500 annually....

I have aprox £1900 on one of the cards and £400 on the other, I make way more than the monthly payment each month. Paying off the debt I have on there is my first priority.

The reason why I am asking is because I read somewhere that it damaged your credit score to have a few credit cards with high limits. I do not have a mortgage or a car if that helps. Just don't want to mess up my credit score after I basically jumped through hoops to build it up.

I wouldn't class those limits as high, nor would I say the combined £10.5k is high in terms of total available credit, BUT it is all relative to a host of other personal circumstances. To some those limits may be extremely high. It's far too complex to put down to limits alone.

There are soo many combinations of anomylies made up of address, marital status, employment history, salary, payment history, available credit, outstanding debt, number of recent credit applications etc.

What is pretty well understood though is that it's not too sensible to have too much available credit as it could hamper getting future cards or receiving reasonable limits, but it's difficult to know how much is too much. Then again, some card companies are known for high limits, some are know for poorer limits.

Life in general is easier than understanding the black art of credit !

chriz1000

I used to have around 5 times my annual income when I was 18-20 and I never once lied about my income or circumstances. The problem is they ask for your household income on a lot of the forms, I always included what my parents earned on top of what I was earning. I rang up enquiring if I was meant to do this with my first card and they told me to include my parents, but make sure I ticked the living with parent’s box.
Once some of the big names gave me £15k+ limits, any other card I applied for followed suite.
I’m 24 and still have over a year’s annual income available on cards! If I was to max out all my credit cards I would be about £120k in personal unsecured debt. Luckily I’m not stupid and have no outstanding personal debt until I get my mortgage.

I have however used 0% balance transfers on credit cards to sponsor some of my businesses and to gain funds which helped the company get business loans. To be honest without them I probably wouldn’t be comfortably working for myself.
It’s only bad to have a high limit if you need to apply for more borrowing as your potential borrowing power will be too high.

emma396

I got a 5k MBNA sony card just before xmas to get the free mp3 player, have also got 3k m&s, 3k morgan stanley, 2k nationwide and 1k sky. i pay off all the cards each month, except the sky coz it's interest free and only have the nationwide for hols. But,I think the sony card has literally killed my chances of anymore credit. I applied for an amex card and got rejected and most recently a britannia card and also got rejected. credit crunch or too much credit available to me? who knows?

udydudy

emma396 wrote: »

I got a 5k MBNA sony card just before xmas to get the free mp3 player, have also got 3k m&s, 3k morgan stanley, 2k nationwide and 1k sky. .........But,I think the sony card has literally killed my chances of anymore credit. I applied for an amex card and got rejected and most recently a britannia card and also got rejected. credit crunch or too much credit available to me? who knows?

I think the reason you got rejected could be that you applied for too many cards in too short a time (in addition to maybe available credit). more than 3 searches and some cc companies give either low limit or reject.

Some cc companies like MBNA & Egg give high limits as a percentage of your income. nearly 1/3rd to 50% .

But then irrespective of how much you used, i believe having credit limits (all cards included) affects how much future credits limits(if any) u would get. Best is to cancel cards before you apply for new ones. I was personally having total card limits 4 times my annual income. though all was stashed away in savings accts which unfortunately do not show on your credit files!!!.

But then got low limits on new cards until I started to cancel old cards of no use to me. I always pay full balances on all expenditure cards(ones i use for expenses) and minimum balace(of course) for stoozing cards. Can not complain £114,000 credit card available credit is not a joke in wrong hands.

vikingaero

My credit card limits are much higher than my needs. I have 3 cards with between £10k £15k on each one. The 4th card I have has a £45k limit.

But an anomaly exists with my wifes cards. She applied for most of them when she was a shop assistant earning no more than £12k. She has about 10 cards with around £10k limits on 5 of them and the other 5 have limits of £20k+. In addition she has shed loads of store cards.