Pros and Cons of a High Spending Limit on your Credit Card

There are several pros and cons of having a high spending limit on your credit card. The credit card holder has a great deal of spending freedom and can very often juggle their finances most effectively in this fashion but the downside is that there is a very real possibility that they will succumb to temptation and allow their spending to get out of control. This is one of the biggest causes of serious personal debt problems in society today.

Credit cards are an absolutely vital tool for most of us today in managing our personal finances effectively. As we purchase and pay for more and more services either via the telephone or online, credit cards are required to pay for same. If we are travelling overseas, credit cards largely eliminate the need for us to change a lot of money in to a different currency and allow us to spend in exactly the same fashion as we would at home. Credit cards even allow us to defer payment for items for up to six weeks or more by using the card and paying for our purchases effectively only when the bill drops through our door.

Having a high credit card spending limit allows us to purchase items which we may not at the time be able to afford and pay them off on a gradual basis every month. This is particularly useful when we are faced with a large expense which we had not anticipated – such as perhaps car repairs – and simply do not have the ready cash available to pay for same. Instead of taking such as a personal loan, we can use our credit card and pay off as much as we can afford each subsequent month, subject to the minimum payment amount.

The downside of having a high spending limit on your credit card is principally of course the temptation which it places in your path. Rather than using it as described above to pay for necessities or emergencies, we may find ourselves using it for large purchases which we simply want but do not need. We may find ourselves eating out more often than we can afford and paying on the credit card, or even taking weekend trips away on the strength of same. In situations like these, we tend to think of credit card spending power as actually being cash in our pockets when of course it is anything but. Very often, it is only when it is too late and we begin to realise the debt we have accumulated in this way and how much the minimum monthly payment alone relates to that we realise the folly of our actions.

Having a high spending limit on your credit card is therefore something which is very personal to the individual in terms of whether it is indeed a good idea. If you suspect at any stage that your limit is proving a temptation, ask immediately to have it reduced before you reach the point of no return and find yourself with debt problems potentially for years to come.