A credit card with a high credit limit could be risky if you don’t control your spending
There are a lot of Australian credit cards that offer a high limit. People apply for these cards thinking that the higher the limit the better off they will be. This thinking gets a lot of people in trouble when they realise that the higher the limit, the higher the debt possibility and the more credit card problems there will be.
Avoiding issues with your credit cards that have a high limit
Most of the prestige credit cards come with a high limit. The most common form of prestige cards are gold and platinum cards, but there are silver or black cards that are also available. Some of the higher-end cards will charge a fee for joining and most of them have a very expensive annual fee.
If you need to have credit to make a large purchase you would be better off getting a loan that is unsecured from a bank or another financial institution. You will pay less interest for a long-term loan and save a lot of money by doing it this way.
When high limit cards are useful
If you have money in the bank to finance a new vehicle or another large purchase item then having a high credit limit on your card is useful. You can use the card to make the purchase and then pay it off right away by forwarding the funds in your account over to your card. This avoids carrying large amounts of cash around when you have the money available to make a purchase. It also means that you don’t have to wait for any checks to clear since the purchase will be approved right away.
Standard card limits
Most credit cards will give you a limit based on the information you have provided in your application form. Your job stability and income, as well as your other debts and expenses will be taken into account when you first apply. If you always make your payments on time and show that you can responsibly handle a credit card you can call up your card issuer and ask for your credit limit to be increased. In many cases it will be allowed if your history with the credit card company has been favorable and all your payments have been made in a timely fashion.
There are times when a high limit card will come in handy, and times when it will be burdensome. As long as you handle credit cards responsibly and do not make purchases that you really cannot afford, having a high limit can really be beneficial at times.