The pace of life moves much differently in Athens compared to the U.S.
One part of culture shock I cannot get over, no matter how many years I’ve been in Greece, is the Greek attitude toward time. As an American, I was always told time was something I shouldn’t waste, that time was money. Since moving to Athens, I have had to acclimate to a slower pace of life. The non-emphasis on punctuality is not unique to Greece, so I expect these experiences to be relatable to…
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Believe it or not, maxing out your credit card isn’t a bad thing — if you pay off the full balance right away. However, failing to pay off a maxed-out credit card immediately can cause you huge problems.
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
We all know your card may be declined if you try to make a purchase that would put you over the spending limit. That can be embarrassing, and it can force you to use cash or another credit card (which racks up more debt) to cover your expenses.
But there are other, bigger consequences you might not know about.
Some cards allow you to spend more than your credit limit — and this is even worse than having a purchase declined.
Cards that allow over-limit spending require you to opt into it; if you don’t, then you cannot exceed your spending limit. But if you’ve opted in, and you go over your limit, then you may be charged an over-limit penalty. This fee is usually $25 to $35, but it can be as high as the amount by which you exceeded your limit.
You may also be hit with penalty APRs — the highest possible interest rate your credit card can charge. Even if you start making on-time payments right away, this penalty APR may last for up to six months.
Need help paying off a large credit card balance? Check out our list of the best balance transfer credit cards and see if you could get a 0% intro APR for 12 months or longer.
Your minimum payment and due date are not set in stone. If you have a maxed-out card, then the issuer may demand a higher minimum payment and/or ask you to make a payment immediately.
If you regularly max out your credit card without paying off the full balance, then your card issuer may decide that you can’t handle your current spending limit. Your credit limit may be decreased at any time, and this can hurt your credit score.
Your credit utilization ratio is a major factor in your credit score. It’s the amount you owe divided by your total credit limit — and the lower it is, the better.
If you have a $10,000 credit limit and an outstanding balance of $6,000, then your credit utilization ratio is 60%. If your credit limit is lowered to $8,000, then your credit utilization will jump to 75%. This will almost immediately hurt your credit score.
Most credit card issuers report info about your account — including your balance — to the credit bureaus on your statement closing date. If your credit card is maxed out at that time, then your credit utilization ratio (for that card, at least) will be 100%. And that’s very bad for your score.
A sudden spike in your credit utilization ratio can cause your credit score to drop by double digits.
Consider a maxed-out credit card your No. 1 financial priority. The APR you’ll pay on your outstanding balance will eat up your income and put you behind on every financial goal. If you find yourself with a maxed-out card, take the following steps.
Take it out of your wallet and lock it away. Remove your card info from apps and websites like Amazon. Make sure it’s not your automatic payment option for recurring payments.
Look through your payment history for this card and any other card you may have. Odds are there are several expenses you can reduce or get rid of altogether. You may even be paying for services and subscriptions you’d completely forgotten about.
Balance transfer cards allow you to move your existing credit card balances to a new card, which charges 0% APR for a limited time — typically 12 to 21 months. For that period, you won’t rack up additional interest charges, so there will be more room in your budget to pay down your balance.
You’ll typically have to pay a fee of 3% to 5% of the amount transferred when you open the card. And once the 0% APR period ends, a high interest rate will be applied to any outstanding balance. Do your best to pay it off entirely before that happens.
Finally, it doesn’t hurt to ask your credit card issuer for a little breathing room. It’s possible they’ll help you out by waiving some fees or lowering your interest rate — especially if you’re having financial difficulties that are outside your control.
Having a maxed-out credit card isn’t the end of the line. With the proper steps and attention to the issue, you’ll be able to get back on the right track with your credit.
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James McClenathen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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Your 10-year cardholder anniversary isn’t an extra-special milestone. Your card company won’t send you a pair of tin cufflinks or diamond earrings.
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
However, keeping a credit card open for at least that long can have several benefits — even if you don’t really use the card anymore.
The length of your credit history is the third-biggest factor in your FICO® Score. It includes both the age of your oldest credit account and the average age of all your accounts. The older, the better.
If you close a credit card you’ve had for years, then your average account age — and therefore your FICO® Score — could drop by quite a lot. If you no longer use the card, consider keeping it open anyway, so long as it doesn’t charge a high annual fee. Just make a small purchase once a month or so to make sure the card isn’t closed due to inactivity.
My suggestion: Use the card as your automatic payment option for a streaming service or other recurring bill.
Want a credit card that will give you generous rewards for years to come? Check out our list of the best credit cards to find your next “forever” card.
Credit card issuers love a longtime customer in good standing. If you’ve made on-time payments for 10 years running, then you have some leverage to ask for better terms, like:
You’ll also have better odds of being approved for an upgrade to a better card, like a premium travel rewards card.
Your credit utilization ratio is the percentage of your available credit that you’re using. This is a huge part of your FICO® Score. It’s best to keep your utilization below 30%, and the lower, the better.
If you close a credit card, then your available credit will drop — and so will your credit score.
Here’s an example:
| Scenario | Total Credit Limit | Amount Owed | Utilization Ratio |
|---|---|---|---|
| With old card | $10,000 | $2,000 | 20% |
| Without old card | $5,000 | $2,000 | 40% |
Despite the benefits of keeping a credit card open as long as possible, there are some good reasons to close a card, too:
It works to the advantage of most people to keep credit cards open for 10 years or longer, but make sure to assess your personal credit situation before making a decision about the fate of your card.
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
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