Credit Limit is the maximum amount you can spend using your credit card at any given time and it is set by the credit card provider.
So the important thing is, how big should your credit card limit be? Whether it is more or less, the credit card limit determines how much you can purchase in terms of value. While setting your credit card limit, credit card providers look at your credit score. When you have a good credit score, you probably deserve a $100,000 credit card limit and more.
Even if your credit score is significant and good, the credit card issuer may also look at your payment history before deciding to give you a higher credit card limit. After many years of using your card, you may find yourself eligible to apply for a higher credit limit.
Depending on how you use your card, a $100,000 credit card limit can be good or bad also. In this article, we discuss the best and worst things about such a high credit card limit. Let’s see.
The Best Things about $100,000 Credit Card Limit
With higher credit card limits, you can buy more and save some money for future emergencies. Here are some tips to help you get a higher credit card limit:
1. Increased Buying Power
Of course, the higher credit card limits enable you to make large purchases. That’s why it’s easy for you to buy large appliances, computers or other gadgets. However, you may not be willing to spend all your cash to make all such purchases. High credit card limits allow you to make large purchases at once.
2. Great for a Rainy Day
Life happens. Issues like medical bills, car repairs, damage to your home arise as you live. If your credit card limit is high, it is likely to get you out of a big jam. Just say you need to remake your home. The Higher credit limits enable you to extend your payment over a longer period of time.
3. Improving Your Credit Score
Do you have any idea that the debt-to-credit ratio determines your credit score? Lower credit limits and less money you make can have a huge impact on your credit score. However, if you have a high-limit credit card, the debt-to-credit ratio is much lower. This will greatly improve your rating.
4. Peace of Mind
This is evident from the fact that your credit rating will improve. In addition to the other benefits you enjoy, you get peace of mind. You are attracted to other lenders as a loyal borrower. The good thing about it is that you can be sure that you are on the right track financially.
The Worst Things about $100,000 Credit Card Limit
No one said raising your credit card limit is a ticket to happiness. However, money can buy things but not happiness. With higher credit limits, you greatly increase your chances of increasing your debt. Still, you run the risk of paying too much interest. Below are some bad things about having a credit card limit:
1. More Debt
People who can borrow more have higher debt rates. In fact, higher credit card limits mean you can spend more. If you are cautious, you can probably avoid debt if your debt limit is low. For this, you need to pay attention to how and what you spend your money on. That way, you can avoid borrowing heavily.
2. High Interest
If you can’t repay your monthly credit card balance completely, you may be slapped with higher interest rates in the future. It just means paying more.
3. Over-Reliance on Credit Cards
A high credit score will enable you to qualify for other credit cards. This can make you more dependent on the card and therefore increase your growing debt. Finally, it can also affect your credit rating.
4. False Sense of Security
Despite the high credit card limit, you need to be strict about how you spend your money. In any case, an increase in your credit card limit is not consistent with improvements in your credit score. Any sense of security you get can only be false.
What if the company gave you a $100,000 credit card limit? Well, don’t celebrate yet. While you may enjoy many benefits, you may end up doing worse off.