January 11, 2024

What to do if you max out your credit card

What are the consequences of reaching your credit limit? We show you what you should, and shouldn’t do, if you max out a credit card.

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What to do if you max out your credit card

Woman worried about credit card bill

Using credit cards is a fact of everyday life. The internet and online shopping apps have dramatically shifted how people pay for things. It’s not hard to see how running up a large credit card balance can happen. 

Maxing out a credit card doesn’t just mean running up a high balance. It means running up the HIGHEST balance allowed on your card. Leaving zero credit available and your card likely getting declined. So, what do you do if this happens, or has happened to you?

What happens if you max out your credit card

Canadians told BDO in 2023 that credit card debt a big very worry, with 29% saying it’s their most stressful form of debt.

Maxing out your credit card has many consequences. As already mentioned, your card will likely be declined when you try to use it.  

It is possible that some low-value transactions may go through even if you are at your credit limit, but this varies from card to card. If this happens and you go over your credit limit, you will likely have to pay an over-the-limit fee.

A higher balance also means more interest payments.
“The interest payments alone can become too much to handle when you max out a card,” says Jasmin Brown, a BDO Licensed Insolvency Trustee.

Your credit score will also drop. How much depends on each person’s situation, but a maxed-out credit card will mean a decrease in your score. This is because a maxed-out card often shows you’re spending beyond your means. There are ways to repair your credit score, though. 

A higher balance also means higher minimum payments. The increased price per month may mean you have trouble keeping up with your bills.

When a maxed-out credit card isn't a problem

There are times when maxing out your credit card doesn’t mean you’re in financial trouble. For example, if you get your first credit card while attending post-secondary school, you’ll probably be given a low credit limit. If, after graduating, you get a job and see your spending habits increasing because you can now afford more, you may end up maxing out that lower credit limit.  

If you know you’re able to make the payments each month of your current credit limit without any financial worry, you can ask your credit card company to increase your limit. Only do this if you are COMPLETELY CERTAIN you can pay off each month in full.     

Steps to take if you max out a credit card 

Freeze it 

If you max out your credit card and know you can’t afford to increase the limit, stop using the card immediately. That means not using it online, or in person.  

Delete your credit card information from any apps or internet browsers it’s currently saved ontoCancel subscriptions that are linked to your credit card. Leave it at home when you go out  

Some people take the idea of freezing a credit card LITERALLY, by putting it in a glass of water and sticking it in the freezer. If you want the card, you must take it out of the freezer and wait for the ice to melt before using it. The idea being by the time that happens you probably will have changed your mind about what you wanted to buy. 

The one surefire way to ensure you don’t use the card is to call the credit card company and have them freeze the card for you. This way you won’t be able to make any purchases with it even if you want to.   


If your credit card is maxed out, you might be living beyond your means. It’s time to budget. Budgets show you what you can afford and there are lots of different budgets, each with their own pros and cons. 

For a very simple budget, write down all your known expenses, rent/mortgage, internet, phone bill, food, subscriptions, transportation etc.  

See if there are places you can cut spending. Don’t order in or go out for food, have homecooked meals to save money instead, cancel one of your streaming services, shop at a cheaper grocery store chain, don’t get that daily $5 coffee. Everyone has some way of saving money through budgeting.

Pay more than the minimum 

“Some people I see are surprised that only being able to make the minimum payments can be a sign of trouble,” says Jasmin. “Their credit score may be good because they’re making payments each month, but the debt isn’t going anywhere,” she notes.

Paying only the minimum on a maxed-out credit card will not reduce the balance quickly. You’ll end up with hefty interest payments, and it will take years to pay off the entire card. If you pay more than the minimum each month, you’ll: 

  • Save money on interest payments
  • Pay down your balance faster
  • Potentially improve your credit score

Setting up automatic payments through your bank to pay off your credit card is one thing you can do to make the process simpler as well.  

If you have money at the end of the month you can afford to put towards your credit card, do it. Even if it’s just $20, It makes a big difference in the long run.

If you want an idea of why you need to pay more than the minimum, just look at your credit card statement. According to Jasmin, those frequently tell you how long it will take to pay off the balance with only minimum payments.

“From that, you can get a sense of whether paying it off on your own is feasible or if you need help. But if you only ever pay the minimum, you won’t get traction.”

Balance transfer credit cards

The biggest problem with credit cards is the interest on your debtOne way of dealing with this is to get a balance transfer card. Balance transfer cards offer a period of much lower interest rates than normal credit cards.  

These cards work exactly like how the name sounds. You transfer your debt from one card to the balance transfer card. By moving your debt to a card with a lower interest rate, you can tackle your debt without paying those high interest fees.  

Some cards will offer you a period of 0% interest on the balance you transfer over. If you know you can pay off your debt quickly without having to pay interest, it’s an option worth considering.  
You will need good credit to be approved for one of these cards so if you’ve struggled with credit for a while this may not be an option available to you 
It’s also important to note that after a certain period the interest rate on the balance transfer card will increase up to that of a normal credit card. This can be anywhere from 6 months to a year after you start using the card so if your credit card debt is too large to be tackled in that time this may not be the best option.  

Contact your creditor

This strategy may work best if you only have one card you’ve maxed out, Jasmin says.
“If there’s one place you owe money to, it may be easier to negotiate with them directly. It becomes more difficult when you have more than one competing obligation.”

Negotiating with your creditor and making them aware of your situation may allow you to reach a settlement you can afford. They may have you pay less money for longer or even accept less than you borrowed.

Debt consolidation 

Another way of reducing your interest payments is debt consolidation. If you have multiple debts, debt consolidation allows you to combine them all into one payment with a single interest rate. That interest rate will likely be less than the one for your credit card.  

With one payment, it also simplifies your payment process each month. You don’t need to track multiple debts.  

If you keep using your credit card after debt consolidation though, it can lead to more debt. 

What NOT to do 

If you max out a credit card it’s not just about what you do, but what you shouldn’t do. If you have debt you don’t want to make it worse.

Avoid payday loans at all costs

If you’re in debt, the worst thing you can do is add more. Payday loans will not help you solve your debt problem. Payday loans are short-term loans and they come with incredibly high interest rates and fees. 

You’re only allowed to take out a payday loan for a couple of weeks. So, while it might let you pay a certain expense if you can’t use your credit card, you’d then need to pay off the payday loan very quickly. And there are some big penalties if you don’t.  

If you think the interest rate on your credit card, which is usually around 20%, is high – payday loans can have interest rates close to 600%! So not paying it back in full right away will just send you into a debt spiral.  

“You can’t pay off debt by adding more debt. I see people using one form of credit to pay off another but that’s really a band-aid solution that eventually falls apart. You should speak to a Trustee, like myself, if that’s what you’re doing.”
 The bottom line is if you’re in debt, don’t add more debt.

Don't close the account

You may think that simply closing your account might help somehow. This will hurt you as well though. Even if you pay the balance and want to close the account to avoid using it again, this will likely damage your credit score as well by erasing credit history. You’re better off keeping the account open and working to pay off the debt than simply closing it.  

Don't ignore it

Often people want to ignore their financial problems, hoping they will work themselves out at some point. But that’s the number one thing you shouldn’t do, says Jasmin.

“Things don’t get better if you don’t acknowledge them. We know there is a lot of stigma around the word “bankruptcy.” It can scare people. But it is meant to give you a fresh start vs. letting the problem grow, and it is not the only option.”

Ignoring a debt doesn’t just mean ever-mounting bills, it also means more stress and anxiety. It can also limit the options available for you to get out of debt.

We know Canadians don’t like to talk about their debts. BDO’s latest Affordability Index showed 56% of the country say financial issues are harder to discuss than relationship or health issues.

It may be hard, but if you have debt you’re struggling to pay, it’s crucial to seek professional advice.

What if you can't pay off the debt?

If you’re struggling to keep up with your bills and don’t see any way that you’ll ever be able to pay off your credit card, we can help. Our Licensed Insolvency Trustees can meet with you to discuss your situation and show you a path to become debt free. This may include a consumer proposal, which can write off up to 80% of your debt and legally protect you from your creditors.   
No matter what your debt issue, they’ll be there to help you through the whole process of becoming debt free again.

Do you have more questions?


January 11, 2024

What to do if you max out your credit card

What are the consequences of reaching your credit limit? We show you what you should, and shouldn’t do, if you max out a credit card.

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