Credit cards are always a great way to build up your credit score, but there are other benefits of higher limits in credit cards. When you have a higher limit with your card, it is easier for you to have more control over your spending. With a high limit, you are less likely to being declined when making big purchases.
This article is going to be about the pros and cons of having a higher credit limit on your credit card.
Advantages of Higher Limit in Credit Card
There are a few advantages to having a higher limit on your credit card. The first is that you will have a better credit score. This is because when you have a higher limit, that means that the bank sees you as being more trustworthy and in turn gives you a better credit score. The other thing is that with a higher limit, it is much easier for you to keep track of your spending. For example, if your limit was $500 and all of a sudden you needed to buy an expensive item for work or your car breaks down, then you can easily pay for the item or repair without being declined. This is because with a higher credit limit, this won’t be seen as a high-risk purchase and the bank will approve it.
Disadvantages of Higher Limit in Credit Cards
There are some disadvantages to having a higher limit. One disadvantage is that you may spend more money than you intended. When you have more money available, it is easier to spend it on things that aren’t necessary. People with high limits may not be as conscious about how much they’re spending because they know they can afford it.
Another downside of a higher credit limit is that your credit score might go down. Your credit score goes down if you’re overextending yourself and borrowing too much from your line of credit. If you have a really high limit, you could end up maxing out your card and your credit score will suffer tremendously for over-borrowing. You’ll want to make sure that the items or services you buy with the card do not put a dent in your wallet if this happens.
Make your choice
There are both advantages and disadvantages of having a higher credit limit on your credit card. It’s up to you to decide what’s best for your financial needs and your current credit score. The more you know about the pros and cons of higher limit credit cards, the better off you’ll be.