Training Camp S.03

Aera · First Home Training Camp S.03 · Day 9

Shrink your card limit.

The hidden credit card trap.

15 minutesBanking app or email

Your credit card could be costing you tens of thousands in borrowing power — even if you pay it off every month. Fix it now, before you apply for your home loan, so the bank sees the strongest version of you.

01 · The trap

Banks count your limit, not your balance.

When a bank works out how much you can borrow, it assumes you could spend your whole limit at any time. So a card that's paid off — or nearly — still counts as maxed out.

Most banks treat about 3% of your limit as a monthly repayment you must make.

02 · The cost

What a $10,000 limit costs you.

Keep the $10,000 limit

Bank counts: about $300/month

about $43,000 borrowing power lost

Lower the limit to $2,000

Bank counts: about $60/month

about $9,000 borrowing power lost

Close the card

Bank counts: $0/month

$0 borrowing power lost

Figures are estimates. The exact amount depends on the bank and its test interest rate. Your coach can run your real numbers.

03 · Your move

Two options.

Option 1

Close it.

Best if you don't need the card. The biggest boost to your borrowing power.

Option 2

Lower the limit.

Best if you need a card for emergencies. Go as low as you can.

Not sure which? Ask your coach.

04 · Before you start

Five quick checks.

Pay off the balance. Most providers won't close a card with money owing.
Move any automatic payments and subscriptions off the card.
Check every card — including store cards and buy-now-pay-later accounts like Afterpay.
Ask for written confirmation. Your bank will want proof when you apply.
Never send your full card number by email. The last 4 digits are enough.

05 · Copy, paste, send

Email templates.

Template 1: Close my card

Subject: Request to close my credit card ending [last 4 digits]

Hi [provider name] team,

I'd like to close my credit card account ending in [last 4 digits].

My details are:
Name: [your full name]
Date of birth: [your date of birth]
Phone: [your mobile number]

I'm buying my first home, so please send me written confirmation once the account is closed. If there is anything I need to do first, such as paying a final balance, please let me know.

Thank you,
[your name]

Template 2: Lower my limit

Subject: Request to lower the limit on my credit card ending [last 4 digits]

Hi [provider name] team,

I'd like to lower the credit limit on my card ending in [last 4 digits] from $[current limit] to $[new limit].

My details are:
Name: [your full name]
Date of birth: [your date of birth]
Phone: [your mobile number]

I'm buying my first home, so please send me written confirmation of the new limit once it's in place.

Thank you,
[your name]

06 · Rather call or message?

Say this.

Many banks let you lower your limit or close a card in their app or online banking. If not, call or use their in-app chat:

"Hi, I'm buying my first home and I'd like to [close my credit card / lower my credit limit to $____]. The card ends in [last 4 digits]. Can you do that for me today, and send me written confirmation by email?"

If they offer you a deal to keep the card: "Thanks, but I'd like to go ahead. Lowering my limit helps my home loan application."

07 · Lock it in

Make it count.

Save the confirmation email or letter. Your coach and the bank will need it.
Tell your coach in the app what you changed.
Tap Complete on today's action in the app to keep your streak going.

Your first home plan. In 14 days.

Aera · First Home Training Camp S.03

Done? Tap Complete on today's action in the app to keep your streak going.