You have probably seen ads for credit cards that offer benefits like cash back and air miles with your high limit. While these may sound like perks worthy of a perk, you should know that there are some downsides to having a high credit limit on your credit card. Although they may sound good, the truth is that these perks can cost you much more than you realize. You will need to pay extra for the benefits that you receive, and you could wind up paying much more than you need to. Find out how to find out what you are getting when you get a credit card with a high limit.
One of the main downsides to having a high credit limit on your credit card is that you will have to pay a higher interest rate. This interest rate can be up to 30% higher than you would pay if your limit was low. While it may seem like you are being taken advantage of, there is really no way to blame the credit card companies. They want to make sure that their customers pay off their debts in full, and they have the right to charge you a higher interest rate as a result. With that being said, this shouldn’t stop you from applying for a credit card with a high limit. You should just shop around for the best interest rate.
Credit cards with high limits are often a great way to get some emergency spending money. When your limit is high, you will pay a lot more per month, since you will be charged an interest rate based on the amount you borrow. Keep this in mind, though. If you really need emergency money, you should look for a credit card that has a lower limit.
If you already have a credit card with a high limit, then you probably know how convenient it is to get cash advances when you need them. The nice thing about having a credit card is that you don’t have to go to the bank and wait in line for a wire transfer. You can simply use your credit card online to make a purchase, and then get the money by check or electronic transfer within a matter of days. This means you can go ahead and buy that new video game you’ve been wanting, instead of dragging yourself to the store.
If you have good credit, then this can be a plus when you need to borrow money for something expensive. Because your credit limit is high, lenders are more likely to give you a higher interest rate, so you can use this to your advantage. However, if you have bad credit, you will have to pay more than those with lower credit limits.
There are a few other benefits of having a high limit on your credit card. First, if you pay off your balance on time each month, you will be able to maintain an excellent credit rating. This is important because it will make it easier for you to qualify for future credit offers. Second, a high credit limit can also help you pay back your debt, since you won’t have as much interest to pay. When you use a card with a low balance, you will be paying almost all of your interest, which means that you will have very little left over after making your monthly minimum payments. By using a card with a high limit, you will be able to pay off your debt much faster, which will allow you to pay down your debt even faster.
Last, but certainly not least, the benefits of having a high credit limit on your credit card will help you enjoy rewards and specials much easier. Some cards offer points and miles for spending, while others provide air miles for shopping or concert tickets. By using your credit card often, you will be able to get discounts and other specials that you can not get from any other sources.
As you can see, there are many advantages to having a high credit limit on your credit card. You will be able to enjoy more perks and benefits, which will allow you to enjoy more money in your wallet. Also, you will be able to maintain a good credit rating by paying your balance on time every month. Once you start using your credit card more regularly, you will find that it is one of the best ways that you can protect your credit score, which will allow you to enjoy other perks in life.