Feb
26
We’ve increased your credit line to $16,400.
February 26, 2008 | 1 Comment
And I do not even have a job!!
This is one of these moments where I question the sanity of the world. I get a letter from my Master Card provider telling me about a credit line increase. I can’t even remember what it was before, since I rarely accumulate debt to those levels. First reaction is great, it gives me more flexibility. I am a small business owner, and sometimes I need to make big purchases or buy plane tickets for trips around the world. I have seen large credit card bill, usually paid immediately upon receiving them. Then again, I remember this is not the card I use for business expenses, and for a reason!
This card clearly states they are very willing to loan you money at a variable APR of 12.24%, and cash advances of 22.24% + 3% fee (I do not want to find myself forced to do cash advances ever!!). The interest rates are not even the highest in the industry but they are high enough for me. Not attractive enough to allow myself to carry a balance.
My other card is a Visa with a fixed 7.9%. This is the one I use for business expenses that I may have to carry over for a month or two if a client delays payment. That one has denied my credit limit increase two times, and stays at a limit of $7,000. I guess they have noticed that I am a freeloader and have blacklisted me, or maybe they do not want to put higher risk in a card with such a low fixed interest rate. (Interesting to note that fixed is fixed until they decide to change the fixed rate.)
So what do I do with my Master Card? I wish I could ask them to reduce my credit limit, but I am not sure they will agree to that. I do not want my credit report to show such a high credit limit on a card I will not even use to such high levels.
No wonder we are in a credit crunch. Or… Are we?
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Why? What possible negative can come by showing a larger unused credit line bring?
Your FICO is based on utilisation, so if you only use 1000 on that card, your utilisation is lower than if the limit was 3000.