Even with a high limit, though, it’s a bad idea to use it all. Running up a large credit card balance can impact your credit score, lead to debt, and make it harder to borrow money in the future. Credit cards are convenient and often offer perks and discounts that aren’t available when paying by cash, but be sure to avoid certain pitfalls when using a credit card. Maxing out one credit card is pretty bad for your credit score. Maxing out all your credit cards is much worse. Fortunately, your credit score can recover as you pay down your balances, but first, you have to stop creating more debt. Once your balance has exceeded your credit limit, it can be difficult to get it back down, especially if you’re making only the minimum payment each month. A high interest rate applied to a high balance can be disastrous because it might mean you are making large monthly payments that are being applied only to interest and not lowering your balance. If you’re already having trouble sticking to a budget and making ends meet, a higher minimum payment will put even more strain on your finances.
