What Happens if You Max Out a Credit Card?

What Happens if You Max Out a Credit Card?

Maxing out your credit card can have immediate and long-term consequences. Here are a few things that can happen if you max out a credit card.

Your Card May Be Declined

When your credit card is maxed out, new transactions may be declined since you don't have sufficient available credit. Some card issuers may allow over-limit transactions if you've opted in, but even then, the over-limit amount may be limited—and you'll be subject to over-limit fees.

Your Credit Score Can Decrease

When the higher balance is reported to the credit bureaus, your credit utilization ratio on that card—the percentage of your credit limit you're using—will jump to 100% or more. Since credit utilization is a key factor in your credit score, a high ratio can affect your credit score.

Learn more >> How Important Is Credit Card Utilization to Your Credit Score?

Your Card May Be Closed

If your card remains maxed out for several billing cycles, issuers may consider your account in default. This can result in your account being closed, which can further impact your credit utilization and credit score and reduce your future payment options.

Your Minimum Payment Will Increase

Your card issuer may require you to pay the over-limit amount in addition to your regular minimum payment to bring your balance below the credit limit. This increased payment could put a strain on your budget. If you're unable to make the full minimum payment, you'll face late payment fees.

Your Credit Limit May Decrease

Card issuers periodically review accounts, and a maxed-out card could prompt your card issuer to lower your credit limit. This would impact your credit utilization and limit your borrowing ability.

You May Pay a Fee

If you've opted into over-limit transactions, your issuer may charge a fee when you max out your credit card. These fees, outlined in your cardholder agreement, increase your balance and make it more challenging to pay off.

Your Interest Rate May Increase

Maxing out your card could trigger the penalty annual percentage rate (APR), the highest interest rate allowed on your card. The penalty APR significantly increases the cost of carrying a balance. It can remain in effect for six months or more, even after you've paid down your balance.

Special Checks May Be Declined

If your card issuer has provided you with checks for cash advances or balance transfers, these may be declined if your credit card is maxed out. This limits your options to access funds in emergencies.

Pay Over Time May Be Unavailable

If your card offers a pay over time feature for larger purchases, you may lose access to the option until your balance is reduced.

What to Do if You Maxed Out Your Credit Card

If you've maxed out your credit card, taking action quickly is key to reducing the impact and regaining access to your credit card.

Stop Using the Card

Avoid making new charges on your credit card until you've paid down your balance. This allows you to reduce your balance and improve your credit utilization. In the meantime, use another payment method—ideally cash or a debit card—until you've freed up some credit.

Cancel Automatic Subscriptions

Eliminate recurring payments to prevent new charges and additional fees on your card. The money you save can help pay down your credit card balance faster.

Pay Down Your Balance

Pay more than the minimum to lower your balance quickly and reduce your interest charges. The faster you reduce your balance, the sooner your credit utilization improves. Freeing up available credit can help restore your credit score.

Learn more >> How to Pay Off Credit Card Debt

Transfer Your Balance

Consider using a balance transfer to move some or all of your balance to a credit card with a lower interest rate or higher credit limit, if available. This reduces the cost of carrying a balance and frees up available credit on the maxed-out card.

Learn more >> How to Do a Balance Transfer

Consider Credit Counseling

If you're struggling with multiple credit card balances, a nonprofit credit counseling agency can help you with budgeting and paying off your debt. They can even work with you to create a personalized plan to get your finances back on track.

How to Prevent Maxing Out Your Credit Card

You can avoid maxing out your credit card with some planning and responsible credit card use.

• Monitor your available balance. Use your credit card's app or website to track your balance and available credit. Staying aware of your balance can prevent overspending.
• Set up balance alerts. Enable notifications to receive alerts when your balance reaches a certain threshold, like 50% of your credit limit. This helps you manage your spending more effectively.
• Pay in full each month. Charge only what you can afford to pay off at the end of the billing cycle. This ensures you stay within your credit limit and prevents interest charges.
• Stick to a budget. Create a monthly spending plan that includes credit card payments. This helps you avoid overspending and keeps your card usage in check.
• Build an emergency fund. Save for unexpected expenses to avoid relying on your credit card for emergencies.

Learn more >> The Best and Worst Ways to Use a Credit Card

The Bottom Line

Maxing out a credit card can negatively affect your credit score and limit your ability to make additional purchases with that card. Free credit monitoring can help you see whether a maxed-out credit credit card has impacted your credit score. As you pay down your balance, your credit utilization will decrease, which can lead to improvements in your credit score.