Here’s What Happens When You Spend More Than $10,000 on Your Credit Card

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Know what to expect before putting this much on your credit card. 

Credit cards are normally the best option to pay for purchases. Many of them offer rewards, such as cash back, as well as complimentary purchase protections. If you pay in full every month, it makes sense to use your credit cards for all your usual bills to take full advantage of those perks.

But what if you have a very large purchase planned, like something that’s going to cost you over $10,000? You might already know that banks need to report cash deposits of $10,000 or more and want to see if there’s anything to be aware of with credit cards.

If you have enough available credit for a purchase, then you can put it on your credit card. Your available credit is your credit limit minus your current balance. For example, if you want to make a $10,000 purchase, you’d need at least $10,000 in available credit. Before you do this, there are a few things you should know about.

Your card issuer might contact you about the transaction

Large transactions can trigger a card issuer’s fraud detection, especially if a transaction doesn’t fit your normal spending habits. If most of your credit card purchases are under $100, and then you decide to spend $5,000 or $10,000, your card issuer might want to double check that it’s you and not a scam artist.

If so, your card issuer will either:

Reject the transaction and contact you to see if it’s legitimate. If you confirm that you were trying to make the purchase, your card issuer will tell you that you’ll need to attempt the purchase again so it goes through.Approve the transaction and contact you to let you know about it. In this case, the purchase goes through like normal, and your card issuer sends you a notification about it. The notification will include an option to report the purchase as fraud if you didn’t make it.

Your card issuer could get in touch by phone, email, or SMS message. This will depend on what contact information it has for you and your communication preferences.

Your credit utilization will go up

Your credit card balances have a significant impact on your credit score. That means large transactions could cause your credit score to drop, at least until you’ve paid them down.

One of the most heavily weighted factors in your credit score is your amounts owed. These include balances on credit cards and loans, but balances from credit cards matter much more. Specifically, it’s your credit utilization ratio which is very important. Credit utilization is your credit card balances divided by your credit limits. As a rule of thumb, it’s good to keep this below 30%.

Let’s say you have a credit card with a balance of $2,000 and a credit limit of $20,000. Your credit utilization would be $2,000 divided by $20,000, which is 10%, a great number for your credit score.

You then make a $12,000 purchase. Your balance is now $14,000, with the same $20,000 credit limit. That brings your credit utilization to 70%. A number that high could have a serious negative impact on your credit score. However, only your current credit utilization matters. Once you pay off your credit card, your credit score will go back to normal.

You run the risk of credit card debt

The biggest danger of spending a large amount on your credit card is that it could put you into debt. Because of the high interest rates most cards have, credit card debt is expensive and hard to get rid of.

A credit card interest calculator is a good way to see just how costly this can be. For example, if you have a $10,000 balance on your credit card and pay $300 per month, that balance would take 47 months to pay off. That’s nearly four years! You’d also pay $3,967 in interest charges.

There are two situations where putting this type of spending on your credit card isn’t going to cost you:

You can pay the balance in full by the due date on your credit card statement. When you pay your credit card’s full statement balance, you don’t get charged interest.You’re using a 0% intro APR credit card. This type of credit card has a 0% APR on purchases for an introductory period. If you’re able to pay off your balance in full during that period, you’ll avoid interest charges.

Assuming you have the credit, you can put more than $10,000 on your credit card without issue. Your card issuer may want to confirm the purchase isn’t fraud, though. The potential consequences are damage to your credit score and credit card debt. That’s why it’s best to be careful how much you spend on your credit card and only charge purchases you can afford to pay in full.

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