Choosing a High Limit Credit Card

What Does Your Credit Card Limit Say about You?

It is a wonderful feeling when you get approved for a credit card. When it arrives in the mail, you can feel like a million dollars. It is shiny and new, and it comes with a letter that indicates your credit limit. Its amount depends on your previous credit usage and payment pattern. Lenders won`t set you a high credit limit without knowing that you are able to fulfill your financial obligations. So people with good or excellent credit will have higher credit limits and at lower rates than people with bad or no credit.
Large credit limits come as a privilege. First of all, they give you more flexibility for purchases and a lot of spending power. Then, they let you spend more money without any damage to your credit score: your utilization ratio will remain low.
Credit companies can set you a high credit limit immediately or increase it step-by-step. So if you make regular on time payments and don`t overspend, your credit limit will become higher, often automatically.
However, credit companies can also reduce your credit limit if they see something on your credit record that makes them nervous. If you miss payments or go delinquent, don`t be surprised that your credit line gets cut.

High Credit Limits for People with Excellent Credit

A credit limit means more than just a cutoff point for spending. It is a reflection of how a particular credit card issuer evaluates your creditworthiness and your likeliness to repay debts. The better your credit, the thicker your credit lines tend to be. That`s why credit limits for people with excellent credit often seem like an amazingly large figure. Such customers can have available credit of several thousand dollars thanks to their responsible credit card management.
A large credit line opens you new great opportunities. You can buy a high-end computer that just came out, or you can take a vacation to Hawaii. If you are a business owner, you can order new equipment or expand production. Yesterday you would never believe that it was possible, but with a high limit credit card in your hand, you can make your fantasies come true.
Furthermore, a high credit limit allows you to have just one credit card for all your expenditures. So it`s more convenient and easier to keep track of your spending - you will receive only one statement rather than several ones to worry about. In addition, you can earn more cash back or points rewards if you make purchases on one card.
However, be cautious. Large credit limits can be tricky because their superior purchasing power can lead to unlimited spending. But sooner or later all your debts should be paid back. So control your expenses and don`t accumulate debt that you will not be able to repay at the end of the billing cycle. Large charges, for example travel expenses, should be covered within a calendar year.

Good Credit Cards with No Pre-Set Limit

We all know that every credit card has its limit. But what can you say about a credit card offer with no pre-set limit? It is available to people with good credit. Having a card that doesn`t provide a spending limit can be very beneficial. You can make as many purchases as you can afford without worrying that you can max out your account.
However, if there is no credit limit to report, how do credit bureaus calculate your credit utilization? It is one of the basic components that make up your FICO score. Credit utilization means the ratio between your credit card debt and your credit limit. The lower this percentage is, the higher your credit score rises.
With other cards the credit utilization ratio is calculated according to your credit limit set by your lender. So if you have a credit card with no pre-set limit, you can get into a difficult situation. It can seem that you are using all your available credit. This makes your credit utilization equal 100%, which causes your credit score to drop.
Trying to protect their cardholders, most credit card issuers report your highest balance as a credit limit to calculate your credit utilization. So the way round this problem is to make a huge charge on your credit card. The charge will be considered as your high credit limit.

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The latest query of Credit Card Answers service

User name:
Crystal

Date:
2008-12-23 04:00:28

I have bad credit and I need a card with atleast a $10000.00 limit is this possable??

Answer:

Hello, Crystal. Thank you for contacting us. You see, limited credit is a pretty serious problem, especially in the current financial situation. Customers with limited credit are a bad risk for lenders. And now that banks and credit companies are going through, probably, the most trying times, they are more deliberate than ever in their choice of potential customers. Even good credit histories go through a thorough check. We are afraid, you, being a customer with limited credit, will hardly qualify for a deal with $10,000 credit limit. What you can be eligible for is limited credit cards. They come with a lower credit line. The maximum credit limit a low score owner can have, as a rule, do not exceed $3,000. there can be exceptions, though. A secured credit card can be another option for you. But initially, secured cards cannot give you a credit line exceeding the amount of your deposit. When getting a secured offer you deposit a certain amount of money. And you get a credit limit of, actually, the same amount. In order to obtain a deal with this big spending limit you will need time and effort you will make to improve your credit score and payment history.

How Can Your Credit Limit Affect Your Credit Score?

A high credit limit gives you a lot of advantages. First of all, you will always have extra funds for a large purchase or in case of emergency. Then, you can afford the little (or big) extras, or consolidate all your expenses on the one card and manage your finances better. People with bad or fair credit will highly appreciate the opportunity to improve their credit scores by using high limit credit cards.
Credit-scoring formulas take into consideration numerous factors when calculating your FICO score: the payment pattern, length of your credit history, types of accounts you owe or your utilization ratio. If you spend more than 30% of your credit limit every month, it indicates to the credit bureaus that you do not have enough money to meet your monthly expenses. It will actually reduce your credit score. Moreover, you can be termed as a high credit risk for potential lenders.
Vice versa, having a high credit limit will let you make purchases without worrying that the percentage between your credit card balances and your total amount of available credit (the credit utilization ratio) will go up. And the lower the ratio, the better your credit score!

More available credit for Bad Credit applicants

Gradual Credit Limit Increase

Everyone wants to be able to charge more on their credit cards. If you have proved to be a trustworthy and reliable customer, you can get huge credit lines straightaway. People with bad credit will have to start with several hundred dollars of available credit. If you are in that boat, don't get disappointed. Nearly all credit companies run automatic credit line increase programs.
Credit card issuers constantly review their customers' credit status. What they want to see is a record of timely payments and no delinquencies. So if you manage your debt responsibly, your credit limit will be increased. For example, after six months of on time payments, the lender can boost a $500 credit line to $1000 or higher.
However, don't forget that a large credit limit means more responsibility. Consider it as an excellent opportunity to prove that you have necessary financial skills to manage your money. If an unused credit line will only tempt you to spend, call your credit company and ask them to reduce it.

More Spending Freedom with High Limit Credit Cards