Posts tagged: credit_card_limits

4 Things To Teach New Credit Card Holders

New credit card customers, especially teenagers who are planning to apply for student credit cards, need to know the basic rules that will keep them financially safe and secure. Some rules are easier than others to follow, but they are all very important.

Increase Credit Card Limits

Some people believe that increasing your credit card limits is too difficult and can only be accomplished by those with at least an upper middle class income. Surprisingly enough, however, raising the limits of your credit cards can be done by anyone, no matter what type of income you have.

High Credit Score

Another important rule includes securing a high credit score. This not only comes from paying off your credit cards, but also from properly upholding every other credit investment that you become involved with: car payments, mortgages, businesses, etc.

Obviously, maintaining good credit and thus increasing your credit score will make it much easier to gain the trust of credit card companies, who, in turn, will feel more secure in raising your credit limit. This may seem like an easy and even apparent rule to remember, but most people are rejected from increased credit limits because they fail to follow this “simple” rule.

Make Payments On Time

Another way to improve your chances is to maintain a good financial relationship with the credit card companies. Making your credit card payments on time is the first step, but by also consistently making big payments on your credit cards, companies will be more than happy to continue to increase your limits. Consistency in making large payments on time is the key to constantly gaining the approval of enlarging your credit card limits.

Using Rewards Cards

When making ordinary purchases, people mostly use cash and/or debit cards, which is a safe yet unrewarding way to increase personal benefits. If people would simply switch their usage of cash and debit cards for reward cards, their amount of skymiles and other financial rewards would automatically increase. When buying gas, going grocery shopping, getting new clothes, paying bills, and making other ordinary purchases, remember to use your rewards card.

This simple technique will help you earn skymiles that would otherwise not be gained, obviously, with cash or debit cards. Although credit cards can cause people a lot of pain when used unwisely, they can also be very rewarding when used properly and wisely.

Other ways to maximize the skymiles on your credit cards is to apply all your major purchases to the credit cards. Wisdom must be used when this technique is used, but when used properly, it can harvest huge skymile rewards. Such major investments on credit cards include buying new or used motorized machines such as cars, motorcycles, dirt bikes, boats, etc.

A brand new credit card customer can be very naïve and sometimes suffers the unfortunate consequences of credit card penalties. If teenagers simply follow the rules stated above, they will be able to avoid unfortunate late fee charges and actually gain real life rewards and advantages in the credit card business.


What Are The Pros And Cons Of High Credit Limits?

complete

Pros and Cons of High Credit Limits

When using a credit card, a limit is set upon how much you can spend before you max it out. This limit varies for each person and each credit card. So how high can your limits be? Or, more appropriately, how high should they be? Many would agree that a high credit limit would allow you freedom to buy as much as you want of whatever you want. Oh sure, you can pay for it later, it’s no big deal. Others would say that in reality, high credit limits bind you with debt that you cannot pay back. So who’s right? Is it really that bad to have high credit card limits?

Advantages of High Credit Card Limits

• Using your credit card more, as long as you pay the bills on time, adds points to your credit score.
• Purchasing expensive items is less of a hassle.
• You have money on hand for emergencies should the need arise.
• You do not have to worry about maxing out your credit cards.

Disadvantages of High Credit Card Limits

• If you cannot pay your monthly bills, the interest rates increase more quickly with a high credit card limit than if you were to have a low limit.
• Someone may steal your credit card, and with so much space within your limit will allow them to spend more money that you would have to pay back.
• With a higher limit, it would be more tempting to buy things with money you don’t have, even if you know that you could not pay it back.
• There may be less of a risk using some other form of credit, like taking out a loan.

Do It the Smart Way, Or Don’t Do It At All

When you put a limit on your credit card, be sure that even if you got to the limit that you could pay the money back without strain. Anything that you want that is more expensive than the amount you have within your limit is probably more safely purchased with a loan. It may even be worth it to save up money to buy it. Otherwise, if you cannot afford to increase your credit limit, you probably cannot afford to buy something that expensive.

Make It Easy To Give Back What You Borrow

It is good to keep in mind that no matter what you buy on credit, whether it is expensive or not, it is not yours until you have paid back the money that you borrowed to get it. The pros and cons of high credit limits do not change the fact that credit is money that you do not have, and so the best type of credit is affordable credit. Keeping your limits low will allow you to more easily pay your monthly bills and pay off your credit cards more often, and overall, you will be less likely to get trapped in debt that you cannot get rid of.


How Much of My Credit Limits Can I Use Without Damaging My Credit Score?

complete

You know that your credit score is based on how well you can pay back your credit card bills. So how do we know when we’ve spent too much to pay back? Thank heaven for credit limits. We set these limits so that we do not exceed the amount that we know we can easily afford to pay back. So how close can you get to your limit before it starts to damage your credit score? Here are a few tips to help you understand how much you really should spend within your limit in order to maintain a good reputation in the credit world.

DO NOT go over your credit card limit

No matter how much you want to pay for that riding lawn mower with your credit card, even if it costs more money than you have within your limit, don’t do it! Going over your limit can cause your credit score to go plunge dramatically. Even calling in to the credit card company and prearranging an expense that will exceed your limit will not excuse you from the penalties. If the credit card companies authorize you to go beyond your limit it may exempt you from getting your interest rates heightened, but you will still be subject to the consequences on your credit rating.

Spend only up to about 50% of your credit limit, then pay it off

Sometimes the best way to ensure that you do not go over your credit limit is to set a goal that you will pay off your credit card bills once you have spent half of your limit. That way you will not even get close to maxing out. This also helps you to keep your monthly dues at a reasonable amount, allowing you to pay them easily and on time. Being smart and conservative with your money will show that you are responsible enough to pay your debts, allowing for your credit score to steadily improve over time.

Don’t set your credit card limits too high

You should set your credit limits to an amount that you know you will be able to pay back. Having a limit that is too high puts you at risk of spending more than you can afford to make a monthly payment on. It may be somewhat beneficial to set your limit a little bit above your afford ability in order to keep from getting too close to exceeding it. But having a credit limit that is too high for you to ever be able to pay back lulls many into believing that just because they don’t go over the limit means that it’s okay to go up to that amount.
The main thing to remember when you set your credit limits is that your credit score can benefit only if you do not exceed your limit, and if you pay off your debt before you get too close to that limit. Credit cards can either help or hurt you, depending on how you manage them.