How do they figure the max credit limit on our credit cards?

I'm 23 and never carried a CC balance. I'm looking to request as high of a credit limit as I can from my credit card company since I'll be moving into a new household with a very good initial salary and may need to make big purchases when I move in.

My credit card company makes me request an amount but I don't know what kind of range that the credit card company would allow me. I'm at about 10% of my annual income and I'm wondering if a CC company would grant something like 30 or 40% of annual income, or if that's just crazy talk. What do you all think?

Reply to
Phil, Non-Squid
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DON'T DO IT!

Reply to
Daniel T.

You guys are so hard on poor Phil. He didn't say anything about carrying a balance. How do you know he isn't looking for a higher limit just for convienence or rewards? I, personally, faced this dilemma when I finished grad school. I had a $500 limit and I needed to buy stuff for my first apartment. I ended up writing a lot of checks, which is so 20th centrury... :-)

--Bill

Reply to
Bill Woessner

Never mind that a nice and high CLI on a revolving card you pay off each month does nothing but help your credit scores.

Reply to
Justin

It's understandable... with a large portion of the population drowning in debt, it's easy to assume that "the new guy" is looking for easy answers that will turn him into a debt-laden blob.

My first CC a few years ago when I first started school was $500 too... I couldn't buy more than just a little bit before I had to pay off the balance, which was really annoying. I switched over to others and tossed the card aside. When I found it just recently and checked my account, the limit was still stuck at $500. What a good bit that would have done, so I closed all my unused accounts and now just use one primarily, with a second as a backup.

Reply to
Phil, Non-Squid

Thanks for all your helpful responses.

But you all needn't worry. I'm well aware of the consumer debt trap. I was paid to go to a state college, paid for all my vehicles, room, board, computers, food, luxury items on my own in cash, never borrowed more than $1000 cash from my parents these last 23 years, etc. You get the picture. I look at the credit card balance and compare that to my cash balance. I

*don't* look at the credit limit remainder as unspent cash. I'm definitely not your typical 23 year old. I met a young gentleman about my age at a job interview who said he was $85,000 in school loans. My jaw dropped... I wouldn't even be able to imagine that sort of burden.

The reason I am looking to spend a large portion of my salary in one month is just that. One month. One month to get all the necessary household items upon move-in, and then pay only for things such as... food... for a while after that. I'm just saying it would be nice to have a high CL for those "unknowns" that may crop up unexpectedly. I'm sure you all know what I mean... nickel and diming places for that extra 2-5% cash back reward on your card.

So back to my original question: what are the some of the highest percentages you've seen, or does anyone know how the CC company calculates the allowed credit limit?

Reply to
Phil, Non-Squid

ok, I'll tell you how I did it, recently, using an american express card.

I called in and told the 1st person who answered that I had a large purchase upcoming and wanted to alert credit and authorizations with all needed information. They switched me over to the credit department where a pleasant lady took all the information and asked for banking details. Once I provided the needed evidence (incomen, banking, etc) they (amex) placed support on my account (support=electronic data that contained the gist of the information and that they had verified it) and I proceeded to spend the large purchase and paid it off the next month when the bill arrived.

once that item was paid, my credit bureau report showed amex having doubled my CL

Reply to
Mr Tutu

Phil, you've been given some good advice, but I see from your own comments that you are one of the young ones who will handle debt wisely. While you're shopping for new furniture, be aware that many stores offer credit rates of "12 months same as cash". Read the fine print, but this nay be a good option for you for those whole rooms of furniture you're looking to purchase. Keep in mind, however, that the interest rate at the end of 12 months can be a bit steep. Save in the interim, so that you're prepared to pay this debt in

11-1/2 months! ;-)

Enjoy that new house!

Elizabeth Richardson

Reply to
Elizabeth Richardson

Reply to
Gil Faver

Phil,

I have three different cards that if maxed, would equal 50% of my average annual salary (each card has roughly the same limit), so yes its possible.

One of the cards is a no-fee rewards card, its the only card we use. My wife and I buy almost everything on it, and pay it off EVERY month. Its great because we pay no interest on the charges, gain rewards points, and our cash account has more money for longer periods to earn interest between billing cycles. Word of warning though, it takes me, and especially my wife, a good deal of discipline to stick to that plan. Quicken's reminders are a life saver though!

I can't remember that last time I used the other two cards. I guess if I ever run into a ransom situation in a foreign country or something, they might come in handy!

To answer your original question, In my younger days, when one of my cards was lagging behind the others, I would call and tell them I was considering cancelling. They would usually run a quick credit check and up my limit to compete with the other cards. Most of my credit increases came without warning or request, though. By either neglecting a card for a while, or using and regularly paying off a card, they just kept upping limits. They have never verifed or even asked my income unless I initiated the increase.

I doub't that a newly issued card will give out the kind of limit your looking for, nor do I suspect and existing card will allow you to jump from 10% to 40% at once (especially if YOU initate the increase). Your best bet is to talk with the card company. If your salary has doubled since they issued the card, a credit limit increase of 100% would not change the debt to income ratio they thought they were giving you.

Good Luck and be smart!

P.S. my Dad's Lowe's card has almost a $100k limit. It started at $5k and he has never once asked for a credit increase. He loves Lowe's though.

Reply to
kastnna

Think of a credit card as a convenience for transferring money from one location to another when you need it, never as a source of new money. Do not buy anything using a credit card that you would not have bought with money already in your account using an old fashioned checkbook. Rejoice that the plastic card reduces the hassle and the paperwork involved in spending, but do not accept for a moment the notion that it increases your ?spending power,? like the TV ads want you to believe.

Reply to
Don

I like Quicken, too. I tried MS Money for a while and it was terrible. Just a giant mess.

Exactly. I would just like to put the large ransom charge on my rewards card ;)

Good way of looking at it; thanks.

Reply to
Phil, Non-Squid

I've always wondered about those offers... whether they were any good or not. Specifically, I've always wondered if they consider the balance being carried over each month a negative mark on one's credit record. It seems that it's not a poor choice after all, but do you know for sure?

Well, when I wrote household, I was referring to an apartment actually. I'm just psyched that I don't have to go to school for a while... jobs are so much more fun.

Reply to
Phil, Non-Squid

Are you talking top limit on only one card, or all cards combined? I have had limits that in total exceeded twice my annual income in the past... All with no annual fee and most under 12%, but then my credit rating is hovering around 800...

Reply to
Daniel T.

Assuming you don't go above 40% of the limit or so, you won't have many credit score issues. having one or two other lines with big limits and being empty will help, too. However, empty means no charging monthly and paying off as CC companies report balance at statement close. Or under

20% of total CLI being used on said cards.
Reply to
Justin

Which version of Money were you using? I use Money and prefer it to Quicken, but I'm using a really old version. I've been reluctant to upgrade since MS integrated Money with Internet Explorer and all its problems. Sort of an "if it ain't broke, don't fix it" approach. Just curious about your thoughts on this.

-Will

Reply to
Will Trice

Those offers are good but the interest rates are high so if you don't pay within the 12 months, you may have a steep chunk of interest to pay. Thumper

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Reply to
Thumper

I find it amusing that hardly anyone answered his question. Most just gave advise on how to use or not use a card. Thumper

Reply to
Thumper

But you already had a card. Thumper

Reply to
Thumper

A good rule of thumb is two months income.

The CCCs wll give more than that if you pay each month's minimum on time.

Reply to
rick++

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