My credit card limit had not been increased for 3 years. I called the credit card company and asked if they could increase it since I had changed jobs and was making more. To my surprise, they said “NO”. I was confused. In my mind, I thought that making more money meant I was able to pay back a higher limit. Not to mention that I had a good credit score!
I took a deep breath and said: “May I ask why you won’t give me more money on the credit card?”. They answered: “You have TOO MUCH credit”. I didn’t understand what that meant. So, the representative went on to explain that because I was not maxing out the limit I had, there was no reason to increase it.
SHOCKING!
Looking back, I’m glad they did not comply with my crazy request. I’m better off with a low credit card limit.
There are a few things I learned from that experience:
- Good credit allows you to negotiate a lower interest rate but doesn’t guarantee a higher credit card limit.
- The higher is your credit card limit, the more likely you are to spend. The next time they deny you credit, take it as a sign that you are doing something right.
- If they offer to increase your card limit, it’s a sign too (just not a good one)!
- Credit card companies need to make money. Customers who max out their credit cards are the most profitable to the credit card companies, thus the ones with higher limits.
- Credit card is an expensive debt; if you can, avoid it at all costs.
- Stop listening to people with credit card debt for advice. They don’t know any better. You have to guard your mind and not allow thoughts that would set you back to grow.
At the end of the day, you have to understand who you are. Are you more of a spender or saver? Do you see credit cards as a means to obtain something you otherwise won’t be able to afford? What do you usually buy with a credit card (food, clothes, medical bills)? If you are going to use a credit card, you need to pay it off every month!
“You don’t build wealth with credit card rewards and airline miles. You can’t beat the credit card companies at their own game” Dave Ramsey
