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5 Alternatives to Maxing Out Your Credit Card

NEW YORK ( — Maxing out your credit card can have a big impact on your credit score. One of the major components in the credit score formula is the percentage of your available credit you have used. If this number is over 30%, your credit score can be hurt. So it would not be wise to owe $5,000 on your credit cards if you only have a $5,000 credit limit. You'll be much better off lowering this percentage.

Most credit card companies also have fees for going over your credit limit if you have opted in for such a service. Know that if you do opt in, you will likely run into trouble. One of the best ways to keep your credit card debt down is to not allow yourself to spend more than your credit limit. Not opting in for this over-the-limit coverage makes good sense.

There are a number of ways to make a credit card transaction without reaching your credit limit. Here are five alternatives to maxing out your credit card:

Split up your purchases. Instead of making a big purchase on one credit card, consider splitting up your purchases over several cards or payment options. Ideally, try to use as much money as you can from your bank account or cash. This will be money you don't have to pay back. If you can't do that, at least try to disperse the charge over a couple different credit cards.

Transfer your balance(s). Another option would be to transfer the balance to a credit card that has a larger limit and, ideally, a lower interest rate. This will free up the other cards and still leave some room on the new one. Keep in mind, most credit card companies charge a 3% fee for balance transfers, though there are some, such as the Chase Slate card, that offers a balance transfer without the fee if it is done within a certain period after becoming a cardholder. Weigh out the costs before jumping into a decision you'll regret.

As an alternative, you might consider a personal loan to consolidate your credit card debts. This will most likely have a lower interest rate, and may free up your credit cards for emergencies. Make sure this does not tempt you to spend more money on your cards.

Increase your credit limit. If you have made consistent payments on your credit card, your creditor may be willing to increase your credit limit. This doesn't mean you should spend your newfound money. It just means you now have a cushion between your existing balance and your credit limit. Most credit card companies will not increase your limit within the first six months, so don't ask until then. You'll end up wasting a credit pull for no reason.

Pay off part of your balance. To get your card out of that "maxed out" state, you could make a payment on the account to free up some of your funds. Try to pay more than the minimum monthly payment, as that will most likely only cover the interest on the account. Pay as much as you can on the card, and continue making more payments in the future.

Adjust your spending habits. If you know your credit card is close to being maxed out, don't charge anything more on it unless it is an emergency. Wait until you save enough money to make a purchase, and then buy whatever you need. You can still use your credit card at that point, as long as you pay off your purchase right away. In this way, you can still get rewards if your card offers them.

If you are worried about not catching a sale price, ask the store if they have a layaway program. This will let you lock in the low price for a deposit and pay off the rest of the balance when you have money. Use this idea and the others as alternatives to maxing out your credit card.

Bill Hardekopf is chief executive of, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."

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