Have you maxed out a credit card?
I have shared in my book, Everyday Money for Everyday People, and often in my workshops, that I learned about credit cards the hard way. I maxed out my first credit card in a matter of hours (36, from what I recall, at a music store buying a keyboard synthesizer, stand, and studio monitors). I missed payments, was sent to the card company’s internal collections department, and eventually worked out a repayment plan for less than what I owed. And that was just one of several cards I had in my twenties. Needless to say, my credit rating spent most of my twenties in the tank. Fortunately, an experience can be a great teacher, and I’ve learned a thing or two since.
The amount or percentage of credit used verse credit available can have a drastic effect on your credit score. A high ratio of used credit can be an indicator of your dependence on credit or your inability to repay your amount borrowed in a timely manner. It can also lead to getting stuck in the rut of paying just the minimum payments, which can have devastating long-term repayment consequences.
How about you? Have you ever maxed out a credit card? If so, how quickly? Please consider sharing an experience in the comments below.