The Hidden Costs of Credit Card Overspending: Risks & Consequences

Carrying lots of credit cards could lead to overspending.

The easy availability of credit cards and their widespread acceptance at stores makes it simple for consumers to overspend. Through 2010 credit card approval remained within reach of many people despite the effects of a brutal housing crisis and recession in the U.S. starting around 2007. The stores and credit card marketers tout low monthly payments, but abuse of the cards through repeated overspending can cause serious problems, even bankruptcy.

Excessive Debt

Impulse buying can lead to overspending on credit cards, and some people fall into the trap of keeping balances on multiple cards. Then making even the minimum payments could prove difficult after a job layoff or illness. Problems may continue to mount with job loss or illness, with possibly even more reliance on credit cards instead of personal savings. The result: excessive accumulated debt that could take years to repay.

Credit Scores

Excessive debt can cause credit scores to drop. Generally, creditors like to see you spend no more than 30 percent of your available credit--on each individual credit card account. Spending more than that could be interpreted as living on credit or being irresponsible with your spending.

Credit Use

Overspending on your credit cards could cause you to use a large part of your available credit. Then, if you make only the minimum monthly payments, you could find yourself lacking enough available credit when you need it most--during an emergency such as an unexpected home or auto repair.