My Bank Is Raising My Credit Limit
As a business, what is expected of the bank when a customer is starting to pay their debts faster than anticipated? You guessed it! Tempt them with making more debt! That is exactly how — in my foolish younger years — I accrued a massive 70K amount of debt. Now the bank is at it again, raising the credit limit on my account starting July 1st.
I wrote here before about how I declared war against my debt and how I told my parents and they helped me pay some of it. Last week I finally made my first partial payment. It seemed to raise some flags for the bank because one day after that payment was approved, I got a notification that next month the credit limit on my account will become higher.
It wasn’t too long ago that I was the one actively seeking to raise the limits on my account. I needed it to buy a new computer without even asking myself how am I planning to pay for it. I needed to pay the money somehow, and I didn’t see it. In retrospect, it was right of the bank to deny my requests. But, one moment after I’ve shown signs of recovery, they try to hammer more debt into me — not cool, bank! Not cool at all.
This time, I’m ready to face the temptation. I have only the one credit card, I’m using a chargeable one, and I have larger salaries. Even though my credit limit is going to become higher and would let me spend more, I’m going to keep going forward with my plan to pay more of my debt.
I figured out something remarkable about my loan payments last month that my bank didn’t mention: When I make a partial payment, the interest accrued up to that point is deduced from the amount I pay, and then the rest goes towards the loan. For example, I want to make a partial payment of 500$ and the interest accrued up until that point in time is 105$ then only 395$ will be deduced from the loan itself.
This sucks because I want to pay the loan not the interest on it, but if I make a partial payment right after I’ve paid for the month, there is little to no Interest to pay, so I eat away a more significant chunk of the loan itself! If I can afford the partial payment that month, it will let me return more of the loan, if I can’t then the payments continue as they have been up until that point.
The bank is raising my limit in an attempt to make me accrue more debt, but I figured out the trap. I’m no longer thinking about my credit limit as cash — credit limit is still credit just like a loan. When they try to push you down below the zero, aim to soar high above it.
We can do it. If we want to lead healthy lives — we must.
Oren Cohen is a Software Development Engineer, Gamer, Geek, and Writer. He is writing in all sorts of topics on Medium, though his passion lies with Fantasy and Video Games.