3 ms·

Why do lenders give high credit limits that they wouldn't tolerate to begin with?

• brainwad 5y ago
  They would tolerate and even want high utilisation by a normal customer; the problem is fraud. As fraudsters want to get the most out of each crime, they are likely to hit 100% utilisation. So 100% utilisation is a red flag for fraud, especially if it's on every account at once instead of just one card. It's not really something that the bank can fix by changing the amount of its credit lines. That would only change the dollar amount that each fraud would cost; the fraudsters will still maximally use the credit line no matter its size.
• vmception 5y ago
  They want the business. You could choose to use their credit line, or one of the other lenders. An individual lender will [more likely] tolerate the credit limit. Their reaction changes when they can see all the other lenders lines are being used too. Think of it like giving a girl (or anyone you like) a valentine’s day gift, and then seeing them walk down the hall with a ton of valentine’s gifts. You and some others will consider retracting their benefactorship if you could and more would consider not giving any more.
• LorenPechtel 5y ago
  High limits that quickly get paid down are not a problem. I've even once called my CC company to request an increase specifically for the purpose of putting through one large charge to get the rewards on it--I explained exactly why I wanted it. (It was going to cost me the same if I used a CC or a check.) I paid off the pending amount at the time so the whole amount was available. One big charge, paid off next month, then back to normal.