What are the pros and cons of having a high credit limit?

Certainly if you find yourself in an emergency, for instance, you're overseas and need a plane ticket back to Canada, having a higher limit can be useful. But you're right, it increases one's potential fraud exposure. Ideally, you would get the limits on the CC's reduced, and try to have similar levels of available credit on a LOC product.

As far as how you look to lenders, well, obviously your utilization is small (to nonexistent). But when looking at a worst-case scenario, you could draw $30k and skip the country. I'm not sure that's a huge cause for concern at those levels, but there are lenders who keep an eye to the total amount of available credit, and use such in their own internal credit decision algorithms.

I have high limits too. I don't use it. I don't care about fraud risks. That's the banks problem not mine. It doesn't really affect you until you want to get more credit but when that happens simply lower a limit or two.

Any time I get an offer to increase I do it because I think it is funny how high they put my limits especially compared to my income.

Pros
- Decreases your credit utilization ratio, which can raise your overall credit score over time because a high ratio is bad. IE a balance of $500 with a $1000 limit is worse than $500 with a $10000 limit.
- Money available in an emergency. Say a close relative is on vacation in Europe or Asia and gets in accident and you need to get over there ASAP, last minute tickets and accommodations can be in the thousands, but you HAVE to go and worry about the cost later.. happened to someone I know.

Cons
- Too much available credit can be a red mark on your report when applying for loans because some lenders will view you as a risk.
- More credit line at risk if your number gets stolen can lead to more hassle cleaning up the mess after.

Only thing I'd be at all worried about with a high limit is that if you lose your credit card or if someone steals it they could potentially put more on it. But that's nothing that can't be rectified, and it's going to be a potential problem regardless of your limit being $5000 or $20,000.

High limit is good for ensuring that your credit utilization is always low and so that if you had to make large purchases you could.

high limit =status

iownyou wrote: ↑high limit =status

Are you kidding? Status as a moron maybe....

brunes wrote: ↑
Cons
- Too much available credit can be a red mark on your report when applying for loans because some lenders will view you as a risk.
- More credit line at risk if your number gets stolen can lead to more hassle cleaning up the mess after.

We use an internal income to limit ratio risk factor(in conjunction with Equifax's BK nav index) that can cap and/or decline good credit customers that would normally be approved without issue.

OP, a good rule of thumb is to keep at least one card with 10K+ limit and reduce the rest to comfortable historical usage limits. Really no need to have 5 cards each with over 10k limits.

What if you use your cards for business expenses?

25k limit - put 10-15g on it a month
15k limit - barely use it 3-500 a month
4k limit - oldest card (dont use)
9k limit - 1500-2g a month

And soon applying for another 20k card and using 7-10g a month.

I thought rule of thumb was to use less than 33% of your total limit. If I lower my limits Id be closer to 70%.

A lot depends on the bank. When I was at CIBC a few months back looking at buying a bigger house and going over pre-approvals etc the bank rep told me any CIBC credit cards would be counted against my income at 3% (ie minimum monthly payment) of the total limit regardless of what was on the card however all non cibc cards would count as 3% of actual balances per credit report. I almost fell off my chair. I asked he to clarify because that sounded completely backwards and she said she knows but that's how they do it...... I have 40 K available CC limit not cibc so that could be 1200 a month hit on the books depending on who the lender was even though I keep zero balances........

tha_dub wrote: ↑A lot depends on the bank. When I was at CIBC a few months back looking at buying a bigger house and going over pre-approvals etc the bank rep told me any CIBC credit cards would be counted against my income at 3% (ie minimum monthly payment) of the total limit regardless of what was on the card however all non cibc cards would count as 3% of actual balances per credit report. I almost fell off my chair. I asked he to clarify because that sounded completely backwards and she said she knows but that's how they do it...... I have 40 K available CC limit not cibc so that could be 1200 a month hit on the books depending on who the lender was even though I keep zero balances........

Interested in this.

Did it actually count against your TDS? Did she tell you your % and did it include the "3%"?

If you look at the TOS for the new chip+pin credit cards, the banks could hold you liable for fraudulent transactions. This liability goes up with the credit limit. However the liability limit may be unlimited, regardless of what your actual credit "limit" happens to be. (That is the real purpose of chip+pin - offloading the cost of fraud onto you and me.)

Having read the fine print, I think TD is particularly bad in this respect. Whether it would truly hold up in court is another matter, however, it's an expensive fight to fight.

I expect my usage of plain old cash to increase because of this issue.

Years ago banks would automatically increase the credit limits on CC's and I found my card had risen to $46K!!. I didn't even make that kind of money and had it lowered back down to around $10K and left it there for years until I bought a home with my former wife. Over the years I raised it again without issue and added a LoC at the same bank