October 19th, 2012

Facebook Question: Is Having High Credit Limits Bad?

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Is Having High Credit Limits Bad?

We tapped our Facebook followers once again to answer this member’s tough question:

“I am wondering if having high limits on credit cards is good or bad? Is it better to request higher limits?”

Here’s what you had to say!

It’s Bad!

“BAD.” (Arjuna)

“Bad if you’re a compulsive spender.” (David)

“It can be bad because I think it can be looked at as ‘potential debt.’ But it’s always good to keep your balance below 50% of your available credit.” (Amanda)

“Credit cards are bad all the way around in my view. It’s like playing with snakes or swimming with sharks. Eventually it will bite you.” (John)

“Bad because then you’ll keep spending, thus getting yourself further in debt!” (Jebbyjebby)

It’s Good… Kind of.

It’s ALWAYS better for your score to have higher limits, as long as you keep your utilization below 30% (or even better, 10%).” (Corey)

“High credit limit means that you have an outstanding credit history, but do not spend over 30% of your credit limits. Sometimes you must spend a large amount of money to pay something, but remember to pay in full as much as you can.” (Zihao)

“I think a high credit limit is okay just as long as you don’t rack up debt that is beyond your means. Having a balance and making payments on time every month is very good because it shows responsibility.” (Jamie)

It’s good for your score, if you aren’t using them to the max. Even better if you don’t have a running balance and are paying them off each month (i.e. using the card as part of your budgeting plan).” (Jim)

It’s all about credit utilization. A high limit is ok, as long as you don’t go crazy and max out the cards. Keep it below 30%.” (Pete)

“If you have a high credit limit and have it maxed out, it can prevent you from getting credit when you need it. Just make sure you pay off those cards every month or plan on paying them off within a couple of months to prevent high interest charges and keep your credit score high.” (Chrystal)

“Generally, a higher limit is better. Because for any given level of balances higher limits will result in lower utilization rates – it’s better for your score. However, it depends on what you’re trying to accomplish. If you always want to have the capacity to obtain new credit (e.g. in order to obtain the perfect rewards credit card), having very high limits without the corresponding high income to justify them could limit your ability to obtain new credit when you want/need it. The sweet spot is to have adequate credit limits to meet your needs and keep balances to a minimum.” (Mike)

High credit limits are GOOD. Maxing out your cards is BAD. I found that out when I ran a certain card up to 90% of its credit limit to take advantage of a free financing offer and my credit scores got dinged.” (Charlie)

Our Take

All of these responses are great! Having high credit limits can be both GOOD and BAD. If the potential to spend on your credit cards is too tempting, keep you limits low. Or better yet, leave your credit cards at home.

But if you’re working to build your credit for a big purchase—think car or home—getting your limits increased can help your credit score by lowering your credit utilization. Want to know how to get a higher limit? Check out this article from Time Moneyland on 7 Steps to a Higher Credit Limit.

Have a Karmic day!

Bethy, Social Media Maven

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Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

4 Comments

  1. My Discover card limit was raised magically and I found out online 3 weeks before they sent me a letter telling me they did it. Does that happen often?

    Katherine at 9:39 am on October 22, 2012
  2. That can happen. Most credit card companies review your card usage every six months or so to decide whether or not to raise your limit. You could be notified through Credit Karma’s credit monitoring service before your card issuer has a chance to inform you, especially if they’re using postal mail for notifications.

    bethy at 12:05 pm on October 22, 2012
  3. It is absolutely 100% positively awesome to have high credit limits and low debt. As long as you keep your debt low, continuously work to have your credit limits increased. You will build a great credit score and great overall credit. This is a perfect subject on this article and thanks for sharing it.

    Tom Edson from Credit Card Relief Experts at 11:14 am on December 6, 2012
  4. Its scary. There are so many things that can hurt your credit rating. Getting your score fixed can be very daunting if you plan on doing it yourself. If your score is bad I really suggest hiring Lexington Law. They will be able to help you in ways beyond what you can do yourself. They have been around forever so they really know what they’re doing.

    Pat at 4:11 pm on December 31, 2012

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