I have received offer from CBA credit card, The offer is to increse my credit limit from $7500 to $15,000. Actually my average monthly expanse abt. $4,800,
Do you think it will effect my DSR next time when i buy a IP? or should i keep the credit limit as low as possbile?Your input is much appreciated [biggrin]
Andy [eh]
probably – but you can always reduce it next time you need a loan of it is a problem
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Yes it will, I need your income to tell you exactly how much.
At $70K income, having $7,500 CC will reduce your borrowing potnetial by approx. $40K, with $15K it gets reduced by another $40K, though this is a generalisation, and of course your individual details could be very different from my assumptions.
Rgds.
Lucifer_auYes it will affect your borrowing capacity.
Don’t take the higher limit unless you need it.
When assessing borrowing capacity, most lenders assume that you spend about 3% of your credit card limit in interest per year.
The bottom line is, a higher limit reduces your borrowing capacity.
CarLover.
Andy123,
Essentially, banks will assume that you will max you credit card (even if you have a zero balance) and need to account for the minimum monthly payment to service that debt. Carlover mentioned 3%, which is what the minimum payment works out to be for a $7500 credit card debt at $225 pm.
Don’t forget, it will also be included in your statement of liabilities, so it will impact your LVR as well.
Like the sentiments being expressed previously, unless there is a specific reason for needing that facility, then I would stay away.
James
Absolutely will affect your serviceability.
You didn’t seek this increase so obviously you don’t need it.
Toss it in the same place as all the other junk mail you get.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Just a note on my credit card experience.
You can get around the problem by getting addittional card(s)issued to your spouse/friend/slave etc.
As you are not the primary card holder you bear no liability for the debt. Even if the card holder perishes you are not liable. As such the lender won’t hold it against you.
I discovered this when I had to cut up a $1,000 card to qualify for a loan but was then able to get 50k on addittional cards with my GF. I have bought property since though the bank with whom the cards are held.
Some degree of trust involved of course.
Cheers
All BS im afraid. I did exactly what you have in front of you, upped to $15k. used it more paid it off more, now off to Fiji on 90k frequent flyer points this friday with family. Had one time I needed it down, did it over the phone very easily, and got the new loan needed. Cash crisis 2 months later, called up and as it was less than 3 months since last change did that without a new credit review back to $15k. I have maxed it out and paid it 3 times in the last 10 months.
Frequent flyers may not seem much but they do save the budget on hols. Get the card to where you are comfortable, not others with their $2k limit giving advise. It is your call completely, i’m just another opinion giver.[fear]
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Hi Andy123,
im with DD, havent had any problems with the credit card limit, and personally am finding it, that, i am recieving better benefits and discounts, due to having a large credit card limit.
Cheers,
sisAnd SiS ‘loves’ his CC[inlove] Ha Ha Ha
Me i’m ‘just’ above DD’d 2k refrence at 4K..so ???
If you can use it wisely like these 2.. if not..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator
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