Home > Credit Cards > I Maxed Out My Credit Card: Now What?

Comments 0 Comments

Given many Americans’ lack of an emergency fund, even smart spenders can finding themselves bumping up against their credit limit. But whether caused by unexpected car repairs or a shopping habit you just can’t seem to kick, maxing out a credit card can cost you — in interest, of course, but also when it comes to your credit score. (The amount of debt you owe is a major component of credit scoring models.)

Fortunately, there are some steps you can take to minimize both types of damage. Here’s what to do if you’ve gone up to (and even over) your limit.

1. Check to See If You’ve Been Charged a Fee

Thanks to the Credit Card Accountability, Responsibility and Disclosure Act, some issuers have stopped allowing cardholders to spend beyond their credit limits. But others still offer what’s essentially a credit card version of overdraft coverage: If you go over your limit, you’ll be charged a fee — generally around up to $25 for the first instance and up to $35 for the second, per the Consumer Financial Protection Bureau. So, if you’ve superseded your limit, you should check with your issuer to see if you’ve been charged a fee. You may also want to ask if they’ll waive the charge, should this be the first time this particular mis-step has happened.

2. Pay Your Balance Down ASAP

For best credit score results, it’s generally recommended to keep the amount of debt you owe (on each card and collectively) below at least 30% and ideally 10% of your total available credit limit(s), so getting your balance down to at least the first of those percentages should be a priority.

3. Consider a Balance Transfer Credit Card 

If you know you won’t be able to pay a balance down in the short-term or the APR on your card is particularly high, you may want to consider applying for a balance-transfer credit card to at least minimize the interest you’ll have to pay on those charges. Balance-transfer credit cards allows you to enjoy 0% APR promotional financing on balance transfers, though, more often than not, for a fee. (You can find more information on the best balance transfer credit cards in America here.) If you’re carrying debt on multiple credit cards, you may also want to look into a debt consolidation loan.

4. Ask for a Credit Limit Increase

Asking for a credit limit increase can help you get and stay under that aforementioned 30% credit utilization goal. But be careful: you don’t want to ask your issuer for more credit so you can turn around and spend it. That’ll only exacerbate your credit (and interest) woes. Plus, a credit limit increase could generate a hard inquiry on your credit report and further damage your credit score.

5. Check Your Credit

Keep in mind, the terms and conditions on any type of new financing you pursue are going to be based on your credit score. And a maxed-out credit card can certainly weigh yours down. Fortunately, there may be other steps you can take to improve your credit before (and even after) applying for a new loan. For instance, you may be able to get points back by disputing any errors you find on your credit report with each of the three major bureaus. You can see where your score currently stands by viewing your two free credit scores, updated every 14 days, on Credit.com. You also can find more tips on fixing your credit here.

More on Credit Cards:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team