Tips for When You Are Broke and Credit Cards Are Maxed

A young woman is shopping online with smartphone and credit card on hand.
••• Tashdique Mehtaj Ahmed / Getty Images

When you don’t make enough money to support your lifestyle, you may make up the difference by using your credit cards. But you can only do this for so long before all your available credit runs out. It doesn’t take long to max out credit cards, even those with high limits.

For a while, you may be able to continue supplementing your income by simply getting another credit card. Eventually, credit card issuers will start denying your credit card applications because of your high balances. Unfortunately, if you’re also broke and credit cards have been keeping you afloat for the past several months, tough doesn’t begin to describe your situation. Here are some ways to stop living on credit cards.

Don't Get a Credit Limit Increase

A bigger credit limit may give you temporary respite if your credit card issuer approves your request, but you're only buying yourself a little more time before you have to face the debt you've racked up. If you pile more debt on top of that, it will only get worse. It's time to stop using your credit cards and figure out a more sustainable way of surviving—one that doesn't involve creating more debt.

Don’t Apply for Another Credit Card

Chances are, you’ll probably get denied for another credit card. But if there’s a creditor out there who’s willing to grant you more credit—likely at a high interest rate—don’t open any more credit cards. Your current cards are already maxed out. Another credit card, and another credit card payment, will make it harder to afford all your monthly expenses.

Don’t Borrow Money From Other Sources

As tempting as it is, don't borrow from payday loans, title loans, installment loans, and 401(k) loans. Borrowing more money is a quick fix to your situation, but borrowing when you’re already in debt and broke makes the situation worse. The more you borrow, the more you’ll have to pay back. Resist the urge to take out a loan to maintain your current level of spending. Instead, learn to live on your income, making whatever sacrifices necessary to rein in your spending.

Stay Current on Your Payments

If you get behind on your payments, even by just one month, it may be months or years before you can get caught up again. One missed payment can turn into two, then three, and in just a few months, your accounts will be charged-off and in collections. Meanwhile, your credit will have suffered tremendous damage that can take a very long time to repair. It may take some hard work and sacrifice, but staying current on your payments is critical to staying afloat.

Make a Budget

Given that all your credit cards are maxed out, there’s a good chance you haven’t been living on a budget. Now is the perfect time to create one, and it doesn’t have to be complicated. Make a list of all your monthly expenses, then compare the total to your monthly income and see if you have enough money coming in to cover all the necessities.

Ideally, your expenses fall below your income and you’ll have some money left to take care of your credit card balances. However, there’s a good chance the opposite is true, and you’ll have to take extra steps to live within your means. Try tracking your spending if you're having trouble sticking to your budget.

Apps like Mint and YNAB can help you develop and stick to a budget.

Cut Out Extra Spending

If you cut out extra spending, you’ll have an easier time living on your income, you (hopefully) won’t need to rely on credit, you can put more money toward your debt, and may even be able to put money in savings.

Consider cutting cable, internet, gym memberships (as long as you won’t incur a contract termination fee), satellite radio or other internet radio services, magazine subscriptions, and unnecessary travel. You can also reduce your electricity and water usage and cut back on dining out and groceries to reduce your spending.

Try to Increase Your Income

Additional monthly income will help tremendously, making it easier to afford your expenses and reduce your debt. Try bringing in more money by working overtime, getting a part-time job, providing some services on the side, making money from a hobby, having a yard sale, or selling items on eBay or Craiglist.

Be careful not to use the extra income as an excuse to increase your spending. If you’re going to work harder to make more money, put it toward something that’s going to pay off in the long run.

Pay Extra When You Can

To reduce your credit card balances quickly, you’ll have to pay more than the minimum. When money is tight, this may not always be possible. When you can, put some extra money toward one of your credit cards until you’ve paid off the balance. When you’ve paid off that credit card, do the same for another and another until all your credit card balances are paid off.