Financial Counseling Certification Program (FiCEP) Practice Exam

Accepting unsolicited increases to credit limits can lead to overspending because it may create a sense of financial security that encourages individuals to spend beyond their means. When credit limits are increased without a specific need, consumers might feel empowered to take on more debt, which can result in accumulating excessive credit card balances. This can negatively impact financial health and lead to difficulties in managing repayments.

The decision to keep one's credit limit in check can promote responsible spending habits and encourage a more cautious approach to credit. By being mindful of how much credit is available and potentially avoiding the temptation to spend it all, individuals can better manage their financial responsibilities. Additionally, maintaining lower credit limits tends to help in keeping debt levels manageable and credit utilization ratios favorable — which are essential factors in maintaining a good credit score.