What are the cons when a credit card company increases your credit line?

This is the question for economics. Lamar just received notice his credit card company is increasing his credit card company by 1,000 dollars. Lamar is very happy about that. Comment on Lamars statement.





Thanks.|||Credit Line Increases can be good and bad, and you asked for the pros and cons.





Pro-





1. Higher Limit, lowers over all utilization percentage which raises your score.





2. More money in the case of an emergency.





3. Can make banks with higher limits trust you more because another bank has already takin the risk.





Con:





1. Other current creditors that he does business with may decrease his limit, or close the account in fear of having to much credit extended. (which has potential of decreasing the age of his report - a score factor)





2. Most credit line increases come at the price of an inquiry being placed on your credit report.





I would also like to note that a couple of the answers on here are extremely innaccurate....





If a credit card company lowers your limit below your balance, they legally cannot charge you an over the limit fee, and anything over the limit stays at the current APR at the time of the decrease.





And the problem in todays economy isnt Credit Card Debt....


more like irresponsible rela estate agents, brokers, and lenders.|||The banks are banking on a few things:





1. Lamar can't control his spending. It's human nature and the bank is banking on that.


2. He'll spend more so that he will be deeper in debt.


3. He'll be paying more in interest


4. If he can't control his spending, it's likely he will exceed his limit, generating over limit fees


5. If his spending doesn't rise to $1,000, they will lower his credit limit without notifying him. When he does spend, he'll bust his limit and generate an over limit fee. (It is actually happening in today's market! In today's news, some banks have lowered the limit to BELOW the card holder's existing balance!)


6. His FICO score rise is only temporary so that he can qualify for more loans, generating more interest income for banks.|||New credit limit increases his overall credit limit on credit report.


His credit utilization is changing in his favor: higher limit means that he has more available credit versus "used" credit. (balance he carries on cards already).


Credit Score will increase with higher overall credit limit.|||This is sure way to go broke. Because of credit card debt , our country is facing so much hurdles. Obviously , bank love to increase spending limit as lamar has to pay 30 to 40% interest on the amount. It sucks seriously.|||They want him to spend more.|||Let us hope Lamar won't F###k it up like 80% of the population.