February 6, 2023

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

Let’s see what this means practically. 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. This varies from card to card though. If this happens, and you go over your credit limit, you will likely have to pay an over-the-limit fee.  

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 meansThere 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 

Paying only the minimum on 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.

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.  

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.  
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.  

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?


February 6, 2023

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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