You Might Not Realize What Happens When You Spend More Than $10,000 on Your Credit Card


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With credit cards, you can spend up to your credit limit. So if your card has a $10,000 limit, it can carry a balance of up to $10,000.

Credit limits are often a whole lot more money than most people typically spend. So you might be wondering: What would happen if you actually tried to spend more than $10,000 on your credit card? Or what if you eventually found yourself with that amount of credit card debt?

There are a few things that will happen — and some serious financial dangers to watch out for.

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Having that much credit card debt could lead to expensive interest charges

Let’s start with the biggest risk of spending this much on your credit card: If you don’t have enough money to pay it back, you’ll be deep in credit card debt. Credit cards have high interest rates, and they’ve gotten higher in recent years. The average credit card rate is 21.59%, according to Federal Reserve data.

At that APR, a $10,000 balance would cost you $2,159 per year. That’s about $180 in monthly interest charges. For this reason, it’s not a good idea to take on such a large balance unless you have the money to pay it off right away.

If you have quite a bit of credit card debt, look into balance transfer credit cards. These have a 0% intro APR on balance transfers. You can use them to refinance debt and pay it off interest-free during the intro period.

It cuts your spending power and raises your credit utilization

As you spend money on your credit card, it lowers your available credit. If your card has a $20,000 limit, and you spend $12,000, then that leaves you with $8,000 in spending power.

This can cause a few issues. It leaves you with less spending power if you really need it. For example, if you need to pay for an emergency home repair, but you already have a sizable balance on your credit card, you may be out of options.

Using a large portion of your credit can also hurt your credit score. It’s generally recommended to use less than 30% of your credit. On a card with a $20,000 limit, that would mean keeping the balance under $6,000. If you spend more than that, it will likely cause your credit score to drop.

You might need the card issuer to approve the charge

Credit card issuers have fraud detection systems. These flag transactions outside a cardholder’s normal spending habits. So if you’re planning to spend over $10,000 in one purchase, then it may trigger your card issuer’s fraud detection — unless this is a regular occurrence for you.

While this might seem worrisome, it’s no big deal. Your card issuer may just notify you of the transaction as a head’s up and let you know how to report the purchase as fraud if you didn’t make it. Or it may reject the transaction and ask you to confirm it’s legitimate. Once you give your approval, you’ll be able to make the purchase.

There’s nothing wrong with using your credit card to make a large purchase. If you’re paying for home renovations, an engagement ring, or any other big-ticket purchases, it’s perfectly fine to do that with your credit card. The danger is when you spend more than you can afford and end up with costly debt. The best way to avoid this is to only spend what you can pay back with money in your bank account.

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