You Might Not Realize What Happens When You Spend More Than $10,000 on Your Credit Card

Credit cards are a double-edged sword. They have the potential to improve your finances by allowing you to easily build credit and earn rewards on your spending, but they can also tempt you into debt that is difficult to get rid of, thanks to high APRs.

According to the Federal Reserve Bank of St. Louis, the average rate for credit cards that charged interest was 22.63%, as of February 2024 -- ouch! It's worth thinking about interest rates if you intend to make a big purchase on a credit card. Let's discuss the possibilities if you spend more than $10,000 on a card.

You could score a boatload of rewards -- and purchase protection

Let's start with the best-case scenario. If you're using a rewards credit card, making a $10,000 charge could result in a nice little windfall of cash back, points, or miles. If you use a card with a flat-rate rewards structure of 2% on all purchases, that could mean getting $200 back. And this is just one reason why it can be a good idea to use a credit card for a big purchase.

Purchase protection is another. If you spend $10,000 on new appliances for your home, and you later have trouble with, say, your new washing machine, you might be able to get help from your credit card issuer if the store that sold it to you isn't willing to work with you for a refund or a replacement.

Check out a list of our best Rewards Cards here.

Your card issuer could be in touch

Speaking of your card issuer, you might get a phone call if you try to make a $10,000 purchase with your card. Credit card companies are tuned into potential fraud, which makes sense -- the best credit cards have $0 fraud liability, which means it won't be you on the hook for a scammer's shopping spree, it'll be the card issuer. So it's really in their best interest to monitor card holders' transactions for signs of irregularity.

If you buy groceries for $150 a week and don't use the card beyond that, then suddenly make a huge purchase, it might be declined, and you might hear from the issuer -- just to make sure it's you on the other end of that transaction. Or it might go through, and then you might get that phone call or text message soon after.

Your credit utilization ratio will go up

Now onto the less-than-ideal results of making a five-figure credit card transaction. Depending on your credit limit across all your accounts and how much credit you're already using, a $10,000 charge could have a big impact on your credit utilization ratio.

If you have no other debt and $50,000 worth of credit limit spread across multiple cards, $10,000 will take you to 20% utilization. But if you only have a $25,000 limit, that charge gets you to 40%. Since it's recommended to keep credit utilization below 30%, that 40% will likely have a negative effect on your credit score.

You might max out your card

If your credit limit is $10,000 and you put a charge of that much on the card, you'll have maxed it out. And if you already have charges on the card, your big transaction likely won't go through at all, since you won't have the available credit to cover it. A maxed-out card will hurt your credit score. If you end up having to carry the balance for a while, the impact will be even greater (more on that below).

Check out out list of best high-limit cards here.

You may end up struggling with debt

If you charge $10,000 on your credit card and don't have a plan to pay it off (either immediately because you've got the cash saved, or over time), you could watch your debt mount over time. Remember that 22.63% average interest rate we discussed above? If you carry that $10,000 balance for a year at that rate, you'll end up owing $1,268 in interest -- and the monthly payments to pay it off within a year will be $939.

Is making such a large charge on a credit card a good idea? I hate to say it, but it depends. If you've got cash saved to pay off the charge ASAP and you won't be over your credit limit, making a big purchase on a card can be a good way to earn a boatload of rewards and get purchase protection. A balance transfer card can be a good way to pay off debt, if you have a plan to tackle it before the 0% intro APR period is over.

But think carefully about your plan to charge five figures on a credit card -- because credit card debt and credit score damage are best avoided whenever possible.