What to Do When Your Credit Cards Are Maxed Out and You're Broke

A woman holds multiple credit cards in her hand
© Peter Muller / Cultura / Getty

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 all your 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, but eventually, credit card issuers will start denying your credit card applications because of your high credit card 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 get your finances back on track.

Don't Try to Get a Credit Limit Increase

A bigger credit limit may give you temporary respite, that's if your credit card issuer approves your request, but temporary is the key word. You're only buying yourself a little more time before you have to face the debt you've racked up. And 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 Car

Chances are, you’ll probably get denied for another credit card anyway. But just in case there’s a creditor out there who’s willing to grant you extra credit – likely at a ridiculously high-interest rate – don’t open any more credit cards.

Your current cards are already maxed out, and you’re broke. Another credit card, another credit card payment, will make it harder to afford all your monthly expenses.

Don’t Borrow Money From Other Sources Either

That includes payday loans, title loans, installment loans, and 401(k) loans. Borrowing more money is a quick fix to your situation if you can call it a fix.

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 borrow money to maintain your current level of spending. Instead, force yourself to live on your income, making whatever sacrifices necessary to rein in your spending.

Stay Current on Your Payments

Even if that means paying only the minimum. 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 according to a budget. Now is the perfect time to create one. It’s the only way you can get back on track. It doesn’t have to be complicated. Just 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.

Best case scenario, your expenses actually fall below your income and you’ll have some money leftover 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.

Cut out Extra Spending

The brutal truth is that you can’t afford extra spending right now. You’re in debt and don’t have any extra money. Reducing your spending will only help you. 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 towards your debt, and may even be able to put money in savings. If you’re wondering what you can cut, consider cable, internet, gym membership (as long as you won’t incur a contract termination fee), satellite radio or other internet radio services, magazine subscriptions, unnecessary travel, housekeeping, or expensive habits.

You can also reduce your electricity and water usage, and cut back on eating 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 but also in helping you reduce your income. 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 some things on eBay or Craiglist. Be careful not to use the extra income as an excuse to keep spending frivolously. If you’re going to work harder to make more money, put it to something that’s going to pay off in the long run.

Pay Extra When You Can

To reduce your credit card balances, you’ll have to send more than the minimum payment. When money is tight, this may not always be possible. But, as often as you get the chance, put some extra money towards 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.