I’ve always wondered what the purpose of a $30,000 credit limit was. I get what the purpose is for the credit card company. They want you to spend more money and keep a balance on your card, but what would the purpose be for a responsible credit user, specifically one that pays the balance off every month.
Using Your Credit Card for Everything
If you don’t have the ability or the discipline to pay your card every month, then DO NOT use them in this way.
But, for me, I use a Capital One Rewards Card as my primary means of spending. I get Capital One rewards points at the rate of 2 for every one dollar spent, or basically it works out to 2% cash back when I use the Purchase Eraser to wipe out travel spending from my card. (We travel a fair amount, it lets you look back 90 days, and it turns out some odd things like Uber rides, or Car2Go rentals end up getting coded as travel on your Capital One Statement.)
At any time, I have a log of virtually everything I have purchased in a given month, going back 24 months. I print an end-of-year statement for archive purposes. This helps for taxes. Although your credit card statement may not be allowed like the actually receipt, it DOES count as documentation. And, more importantly it reminds you of things you have forgotten about. (Hello, whole house improvement for the home office…)
I pay the card off every month, and unless we are on a long trip, the balance never really drifts up much over $4,000, even by the end of the month. Even with a big trip, we MIGHT hit $8,000 or $9,000. (Plane tickets which are a big part of any travel for us tend to get purchased in advance, as do a few hotel stays, so unless we go to Vegas, the expenses don’t go crazy.)
Big Purchases With a Credit Card
The Capital One Venture Card isn’t my only credit card either. I think I have three of them, and so does my wife. The limits on all of them are in the $20K+ range, so theoretically, I could buy a car or something with them. But, what kind of a moron buys a card with a credit card. (Or a 84 or 96-month loan! Seriously, buy a cheaper car!)
But, I may finally get to use up maybe half of one of the limits.
We are having some new flooring installed in our house. The carpet is at least 10-years old, and wasn’t exactly top of the line when the put it in either. And, we want the whole main level to be hardwood, not just the kitchen.
They make you pay for the floors COD, or more accurately, when they start install. I suppose that makes sense. The hardwood part was just over $6,000 and I think the carpet part ends up being $4K or $5K. The catch is that my hardwood charge is still sitting in “Pending Charges” and it won’t let me pay more than the current balance which is less than $2,000, so… Thursday when the carpet guys show up, my balance could make it to $11,000 or so on the ol’ card.
I guess the purpose of high-credit limits is that if you ever do need it, it is there. That, and the whole “The credit card company hope you run up a big balance so they can charge you interest thing.”