From CNBC: 2025-06-14 06:30:00

Consumers are warned against “credit cycling,” a risky behavior where users max out their credit limit, pay it down quickly, and repeat. While occasional cycling is not a big deal, consistently doing so can lead to card cancellation, loss of rewards, and negative impacts on credit score.

The average American’s credit card limit was around $34,000 in the second quarter of 2024. Credit cycling may appeal to consumers looking to make big purchases or maximize rewards. However, repeat offenders may be flagged by card issuers, potentially indicating financial struggles or even illegal activity like money laundering.

Credit-cycling customers risk having their accounts closed, which can harm credit scores. Keeping credit utilization low is key to improving scores, with experts recommending staying below 30%, or even below 10% for a significant boost. Exceeding credit limits can result in additional fees and higher interest rates.

Instead of credit cycling, experts recommend asking for a higher credit limit, opening a new card, or spreading payments over multiple cards. Paying down balances early can also help improve credit scores by reducing credit utilization rates. Being mindful of recurring charges and avoiding exceeding credit limits is crucial for responsible credit card use.

Read more: How credit cycling works and why it’s risky