What Is a Maxed-Out Credit Card?

A maxed-out credit card is a credit card with a balance equal to the credit limit. So, if the credit limit on your credit card is $3,000 and you’ve spent that amount without paying anything toward the balance, you have a maxed-out credit card.

If you’re a Discover cardmember, you can log in to the Account Center to view your available credit limit.

Understanding why you have a maxed-out credit card is key to using a credit card responsibly. Carrying a very large balance is a sign to check in with your current budget, expenses, credit cards, and financial accounts to ensure that the financial tools you lean on to manage your money are still a good match for your financial reality.

Consider these tips for managing a maxed-out credit card:

Why maxing out matters

The amount of your credit card balances relative to your available credit (known as credit utilization ratio) helps creditors determine the risk they assume. For this reason, if you’ve hit (or surpassed) a credit card limit, it may cause the issuers of your other credit cards to lower your credit line — even if you haven’t maxed out those other credit cards.

By maxing out your credit card, you could:

• Reduce your credit score or ruin your good credit history
• Make it harder to take out a personal loan or home loan
• Put you at risk of going over your credit limit
• Make it tough to pay off your balance
• Increase your minimum payment
• Limit your available credit

It may be a good idea to call the credit card company if you find yourself in this situation, especially if you’ve never missed a payment before or if you have had a life-changing event such as a medical emergency. The credit card company may be able to work with you on the payment schedules and fees. You can also ask the card issuer if they will consider offering a credit limit increase.

But to ensure this doesn’t happen again, review why you maxed out your cards. Then, you can take steps to mitigate those reasons and avoid hitting the credit card limit on multiple credit cards.

Determine why you maxed out your card

Here are some common scenarios that may contribute to maxing out a credit card that you may wish to consider.

• A one-time financial fluke. Were you traveling with only one credit card, making several large purchases to pay for a home remodel, or have you just paid a large medical bill? A medical crisis can push even the most dedicated saver to their financial limits, especially if you’ve already run through the money in your savings account. A home remodel could be a desire rather than a need — or it could be a massive plumbing bill after a burst pipe. Don’t panic when a crisis or large, unexpected bill hits. The important thing now is to consider how to start paying down the credit card debt.
• Living beyond your means. This one may be harder to stop since it’s more likely to have become a longer-term habit. Perhaps you don’t have the cash to fund your essential monthly expenses. Or maybe you keep spending beyond your budget on items or experiences, be they splurges or so-called must-haves. The goal is to reassess if you want to avoid a bad credit score. 
• A low credit line. If you’re trying to build up your credit score and/or have a secured credit card, your credit limit may be only a few hundred dollars, which is a low credit card limit. In this case, a balance equal to your credit limit may not necessarily indicate that you’re overspending. Still, it does present an opportunity to learn the ins and outs of credit and work on improving your financial habits. After consecutively paying off the entire balance on the credit card statement, it’s possible that you can request a higher limit from the card provider. 

Take steps to fix it

Thankfully, many reasons you maxed out a credit card can be addressed.

• Stop using the card temporarily or put a hold on your card through the card issuer.
• Pay as much you can to reduce the balance — and the amount of money you could pay in interest rate charges — each month. It’s a good idea to avoid taking out a cash advance to make the payment, as this could create another series of financial issues.
• Sign up for automated alerts. Many credit card companies provide the option to enroll in automated email or text alerts so you can proactively monitor how purchases impact your balance in the future. You can also check if the credit card issuer can alert you if your credit card balance hits a certain amount.
• Revisit your budget and stick to it. If your monthly expenses closely match (or exceed) your monthly income, consider how you can cut costs or generate an additional source of income. If you can only make the minimum credit card payment, you’ll need to reconsider your spending habits. 
• Use cash. If you have maxed-out credit cards because you struggle to resist impulse purchases, make it impossible to veer from your budget: place only the amount of cash you’ve allocated in your budget into envelopes when you shop. Leave credit cards for emergencies only. 
• Establish an emergency savings account. A typical financial rule of thumb is to build a balance of three to twelve months of living expenses. This will help you avoid using a credit card or hitting your credit limit in an emergency. 
• Prove to creditors that you can manage a higher credit limit by paying on time, not applying for new credit, keeping the card open and your credit utilization low, and paying down the balance.

Eventually, your issuer may be willing to increase you from a lower credit limit to a higher one. This is called a credit card limit increase. Other options include offers for another type of credit card accounts because you’ve proven a strong understanding of how to use credit as a part of your financial life, maintain a good credit score, and not go overboard on your credit utilization. 

Find the card that’s right for you

One important step may be ensuring that your credit card, or any future cards, truly supports your needs.

Credit line amounts, annual fees, interest rates, late fees, and the ability to earn credit card rewards vary from one secured credit card to the next. Take advantage of online reviews and articles from unbiased sources to help guide your search. As you learn what features secured credit cards offer, make a list to prioritize which are the most important to you.

Ask any card issuers what steps are needed to turn a secured card into an unsecured card, which many people associate with the term credit card. The transition is often referred to as graduating from your secured card.

Suppose you have an average credit score and get approved for a new credit card. In that case, your credit limit may be lower than cards offered to people with excellent credit. Still, you will find plenty of options with no annual fee, relatively reasonable interest rates, and rewards.

Plenty of websites review the top credit card deals available for people with average or fair credit, so a quick search could help you narrow down which options to apply for.

The best credit card for you depends on your individual needs, and choosing the right card involves assessing your lifestyle.

• Do you like to travel? Select a card that offers travel benefits.
• Do you like to shop? Consider looking for a card that gives you access to discounts. Or check out cards that offer reward programs on everyday spending.
• Sometimes cards with higher annual fees can pay for themselves with the benefits they offer, depending on your spending habits. But if you don’t believe you would spend enough to earn enough rewards to offset that fee, it’s worth moving on to look at other options.

It’s important to know what kind of card you’re applying for because if you have average credit and you’re applying for a card that requires excellent credit, you could be denied.

Ideally, getting the right credit card for you, and using it responsibly, will put you on the road to earning a better credit score.

And hopefully, you’ve followed a path that may keep you out of debt and away from maxing out your cards.