A credit card behavior is an under-the-radar risk. Expert says

 A credit card behavior is an under-the-radar risk. Expert says

The Hidden Risk of Credit Card “Cycling” — And Why Experts Warn Against It

Most people know the common pitfalls of credit card misuse — like not paying off balances each month or accumulating excessive debt. But there’s a lesser-known practice that’s raising red flags among financial experts: credit cycling.

What Is Credit Cycling?

Credit cards come with a predetermined spending limit, which resets at the end of each billing cycle if the balance is paid in full. Some consumers, especially those with lower credit limits, try to work around this cap by paying off their balance multiple times within the same cycle to free up available credit. This tactic, known as credit cycling, enables them to spend more than their stated limit.

While it might seem like a clever workaround for funding large purchases—like weddings, home repairs, or luxury vacations—or for maximizing rewards points, experts caution that this strategy can backfire.

Why Lenders Are Wary

Credit card companies may interpret repeated credit cycling as a red flag. According to Ted Rossman, senior analyst at CreditCards.com, consistently maxing out your card—even if you pay it off quickly—might suggest financial instability or potential abuse of credit. In more serious cases, it could even trigger concerns around fraudulent activity or money laundering.

“If there’s any chance this could go wrong, it’s better to avoid it and consider other options,” says Bruce McClary, senior VP at the National Foundation for Credit Counseling. “You really need to tread carefully.”

The Potential Fallout

Credit cycling can lead to significant consequences. Issuers might respond by closing the cardholder’s account, which could result in:

• Loss of reward points or perks

• Damage to the cardholder’s credit score

• A lower total credit limit, which increases the cardholder’s credit utilization ratio — a key factor in credit scoring.

High utilization (typically anything above 30%) can hurt your score. For those aiming to boost their credit, experts often recommend keeping this number below 10%.

Moreover, pushing your credit to its limits frequently increases the chance of accidentally overshooting the limit, which can trigger penalty fees or higher interest rates. McClary also warns that auto-payments or monthly subscriptions can unintentionally put users over the edge.

A Better Approach

Rather than relying on credit cycling, experts recommend safer strategies:

• Request a higher credit limit from your card issuer.

• Open an additional credit card to spread out purchases.

• Pay your bill early in the billing cycle to lower reported balances, which can help reduce your credit utilization ratio.

Rossman adds that paying down your balance mid-cycle — not to enable more spending, but simply to keep utilization low — is a smart habit. Since most issuers report balances at the end of the billing period, this can make a positive difference in your credit score.

“It’s a smart move, especially for frequent card users,” Rossman said. “But that’s very different from using it as a way to circumvent your credit limit.”

Occasional vs. Habitual Use

Doing this once in a while may not cause much trouble. Rossman likens it to driving a few miles over the speed limit — unlikely to draw attention if done infrequently. But habitual cycling can cause creditors to take a closer look, possibly resulting in restrictions or account closures.

Ultimately, the message from financial professionals is clear: credit cycling is a risky tactic best avoided in favor of more transparent and responsible credit management strategies.