Thursday, June 29, 2006

Total Credit Limit $57,000 vs. Total Income $45,000

One thing I will never understand about credit card companies is why our credit limits are so high. Credit Card #2 just kept raising and raising my limit when I was near my limit (which was often). It started off in 1995 at $500. Then they kept raising it and before I knew it - my credit limit was more than I made in a year.

Out of curiosity, back in March(when I was close to the credit limit) I checked to see if I could get an instant credit line increase with Credit Card #2. They offered to give me $1,500 more, which I declined. Just the other day (since paying off such a large amount) I tried again and they wouldn't give me an instant increase.

What that confirms with me is that some credit card companies are sneaky. They see you are spending and give you more. They see that you are paying it off and they won't give you any more.

Interesting, to say the least.


sean said...

Yeah, the CC companies, given a little time, sure are good at giving you an especially long rope to hang yourself. My wife, who hasn't had an income in over 3 years (but works infinitely harder than me taking care of our son & household), keeps getting rate increases on ones solely in her name. To the tune of just over $60k

What that confirms with me is that some credit card companies are sneaky.

Oh, I'd say all credit card companies are sneaky. Some are just more evil than others! ;)

Anonymous said...

I think the real blame isn't with banks but with the Federal Reserve. Do you ever wonder where that credit increase or money comes from?

Banks don't manufacture money out of thin air but the federal reserve corporation does so to entice people to borrow and pay interest. It's one big monopoly game and the players are the real losers.

Perhaps now you'll begin to understand why inflation for the first 5 months of 2006 was at 5.2%

Chitown said...

This happened to me as well. I had a $11K credit limit with zero outstanding balance and my CC company decreased my limit to $1K. They claimed that it cost them money to allocate the capital and I wasn't using my account. I had them cancel it immediately. If I did need to use the card, 1K would probably not help.

mOOm said...

Very strange in both directions. I haven't seen either. mY total CC credit limit is $19500 spread over three cards. My salary is $75k and net worth $300k. But the CC companies don't know anything about the last number, which is why I reckon the whole credit report/score etc. system in the US is just totally dumb.

Tricia said...

Sean - I tend to want to say they are all sneaky, but I've only had experience with 3 companies so I was nice and said "some" ;)

Anonymous - thanks for writing some food for thought. I never even wondered where the credit increases came from.

Chitown - Interesting about them reducing the limit. I do like the credit there in case I need to use it (or if they give me an awesome life of the balance transfer offer). It will be interesting to see what they do now that it is paid off, which it is as of 6/30/06 :)

mOOm - You give a great example of your experience. You made three times as much as me (I'm referring to last year) and my biggest card upped my credit limit to $23,500. My total credit limit among all of my cards was definitely more than my yearly income. I just don't get it, and I think Sean (first comment) hit the nail on the head "sure are good at giving you an expecially long rope to hang yourself."

Thanks everyone for stopping by and commenting!