why is there a cap on mods?

Everything that Zanir said is great, but to some extent it also depends on where you are with your mod collection. If a mod is better than the worst mods you currently have AND you're willing to do the work of going in and swapping your Speed Set mod with 3 speed for a speed set mod with 7 speed, then sure. You can keep your +7 speed mod in that case: it's furthering your goals. 

Personally I never keep any 5-dot mod that's less than 10 speed and is purple or yellow (B or A). I still have a few random mods that are slower bc I put them on (mostly useless) old toons a long time ago and never updated them. While I could save a +9 speed and upgrade some old, useless toon who is currently rocking a +8, that doesn't really feel respectful of my time. I'd rather sell the +9, wait until I have a mod that is +12 or +13 on 3 hits (which means relatively low hit quality), and then put that one in there for the +8. 

Increasing mods a little at a time is technically useful, but it's more work than simply setting hard minimums and selling mods that don't meet them even if you might be able to comb through your collection and find a worse one to sell. 

Remember the game is supposed to be fun, so try to make things easy on yourself. In many cases I'd rather leave a new marquee toon one mod short and make an note to keep an eye out for the exact mod I need than equip a bad mod and then have to remember that it's temporary and deal with swapping it later. 

But that's my system. Make a system that works for you. And it's okay to have different standards for different mods. A Defense set with Defense primary and +12 speed secondary might be fine since most tanks don't need high quality speed hits. But a Speed Set with +12 speed secondary might be an instant discard. 

This can be as complicated as you like or as simple as you like. The important thing is just to have some standards and make a habit of selling the mods who don't meet those standards. Then the mod cap will take care of itself.