My main credit card is a Chase Amazon.com Visa card. I pay it off every month and I like it because I do a lot of shopping at Amazon.com, so the rewards are worthwhile for me. My credit limit on that card is absolutely ridiculous. As in something like 20% of my salary. Clearly, I’ve never gotten anywhere near that limit.
My credit card statement arrived a few days ago, and in glancing over it, I noticed the following message:
“Congratulations! Your credit line has been increased. Take advantage of your enhanced spending power to make purchases and transfer balances today.”
I admit, I had to go back and check my old statements to figure out just how much my credit line had been increased by. They gave me an additional $2000.
I am trying to figure out why this happened, given that the news seems to be saying that credit is going to be harder to get. I do have an amazing credit score, and my credit history with this card is perfect. Perhaps they think I’m a good bet. Convince me to transfer all my balances (I don’t have any, of course) to this card and then continue to be a good customer.
Either way, it seems to me things like this are the reason that people get into credit card trouble. It seems ridiculous to me that my credit limit is currently more than 4 months of my take home pay. I suppose in an emergency, that might be nice. I do have an emergency fund to cover, of course, but it’s not tied to a debit card. Being able to put a large expense on the credit card and then pay it off would make things a lot easier.
Either way, this new limit isn’t going to make me spend any more than I have been. But not everyone makes that decision, and that’s what the credit card companies want.
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
When I worked for a (department store) credit card back in the late 90s, there was an script that ran through accounts every x months. People who had good to excellent credit scores and no more than one late payment in the time since the last script was run were often given a higher limit. So far as I could tell, it was all marketing, the theory being that people will see ‘higher limit’, especially around the holidays, and immediately go out and use the card.
We got shockingly few calls asking us to lower their limit again, but an awful lot about two months after the script ran: “My limit was a thousand dollars! How do I have $1500 of charges?!”