Credit cards can be a tricky business. On one hand, you have a way to pay for large purchases that you can’t otherwise buy. On the other hand, you can destroy your credit rating if you don’t handle the properly. Having a high spending limit can be a good thing, but there are pros and cons to it. Here is a look at the good vs. the evil of high spending limits on credit cards:
More to Work With
When you have a high spending limit, it allows you to purchase more things. It also allows you to purchase the things that come at a higher price. This is great for people who need a little help in getting a new stove or refrigerator.
You do not have to worry about going over you limit when it is higher. It can happen, but it’s less likely to happen. You never have to worry about those embarrassing moments when you didn’t realize that you were up to or past your limit already.
You have more in case of emergencies. You will have something to fall back on when disaster strikes or you have an unexpected situation come up that costs a good deal of money. It makes you feel more secure to have that extra cushion to back you up.
Just because you have a high limit on your credit card doesn’t mean that you can afford to pay the bill. Many people make the mistake of charging too much to their cards. This creates a major problem when the bill comes due and you can’t pay it on time.
The higher your credit card limit is, the more it affects your credit rating. Even if you don’t use the card, when compared to the amount of money you make against the amount you could be indebted for if you decide to use the card, it can bring your credit rating down.
It probably isn’t necessary to have a credit card spending limit of $10,000. It doesn’t make sense to have it. If you need that much money, you can always acquire a loan through a bank. Either way, you still owe it, but you won’t keep recharging it every month.
The more you spend on a credit card, the more finance charges will accrue. Finance charges are based on the total amount that you owe. Even if you have a low finance charge, the actual amount that you end up paying can be astronomical if you keep the credit card bill high.
There are good things about having a high spending limit on your credit card. There is also such a thing as excess. Be sure that you can pay the bill before you take advantage of outrageous limits. They look great to you when you are spending. The repercussions can be devastating when the bill comes in.