I have credit cards that I use regularly. I do my day to day spending on them, paying them off in full each month and earning some sort of reward on each of them – points that I can convert into anything from days out to holidays.
I never get to the limit on these credit cards – there is enough room on them to cover six month’s groceries and petrol but I would never need that much credit although it’s nice to know it’s there in case of an emergency.
But, every six to twelve months without fail I get notifications through to let me know my credit limit has been increased – but not to worry, I don’t need to do anything, the extra funds are there to use straight away.
But, I didn’t ask for these credit limit increases. I didn’t need access to the extra funds and if the credit card provider had asked me if I’d like my limit increased I would have declined.
You see, having been in a huge amount of debt before, I know how easy it is to spend money if you have it available to you – regardless of whether that money is yours or not and regardless of how long it will take you to pay it back. I know that if the temptation is there and you have a need for money – or for that new dress, night out or weekend away – then it’s so easy to spend that money once you have access to it.
And that is what the credit card providers are hoping. That I’ll go and spend those few thousand pounds on a new car, a big holiday or fitted bedroom furniture – purely because it’s there.
They’ll usually throw in a shiny offer like no interest for 18 or 24 months to make spending that money seem even more tempting and to make it seem like you’d be a fool not to take them up on it.
But, I’d rather have a credit limit that I am comfortable with, one that is just a little more than I need each month – enough to cover the car breaking down, the dishwasher dying or the cat needing an emergency trip to the vets. I would rather not have the temptation of thousands of pounds accesible at my finger tips.
Also, when you apply for a mortgage, loan or other major financial commitment your credit report shows how much unsecured debt you have access to. So, regardless of whether you are using the £20k limit you have across four different credit cards, if you wanted to go on a spending spree and blow the lot – you could. And that makes you more of a financial risk than someone with a £5k limit on one card. This is something I always bare in mind as long term financial stability is so important.
So, credit card companies. Please stop increasing my credit limit – and the credit limits of so many other people without asking us first. It’s not good for us, the temptation is too big and it will take us too long to pay that money back. We’ll ask you if we need an increase and until then let us use the card, make our payments and enjoy the things we buy – on a credit limit that is within our means to pay back and isn’t going to be a weight around our neck for years to come.