Can I get penalized for maxing out my credit card on one purchase?

Question

I have an Amazon Visa card with a $2,000 limit, and I get a certain number of rewards points every time I use it that I can put toward future Amazon purchases. Ergo I like to use this card for more expensive purchases (gaming consoles, computers, etc.) because the more I spend, the more rewards points I get. I've always been very careful about paying off the charges as soon as they post to my account. Basically, I don't use the card unless I actually have money in the bank.

Now, what if I were to spend the entire $2,000 limit on a single purchase? I've been saving up in anticipation of this purchase and therefore have the money already set aside in the bank, so I could pay off the entire $2k immediately. I figured this would be a good way to rack up some serious rewards points, but I wasn't sure if maxing out the card could hurt my credit score, regardless of how quickly I paid it off. Some sites I looked at said as long as I paid it off immediately, this would be fine. Others said to avoid going over 30% of your limit at all costs. Thoughts?

Answer 1

Now, what if I were to spend the entire $2,000 limit on a single purchase? I've been saving up in anticipation of this purchase and therefore have the money already set aside in the bank, so I could pay off the entire $2k immediately.

There is no problem with doing this. There's a bit of a time delay in credit reporting, so if you pay immediately in the middle of your statement period it will never even be reported that your card was maxed out.

Make the purchase some time in the middle of the billing period, then log in to your account and pay the total before the statement period closes. If you let it roll to the next statement period, it will be reported that your account is maxed out, and possibly, you will be charged interest and potentially a fee for exceeding your limit.

Your utilization is only calculated in a snapshot, there is no history kept. Even if you let your card be reported at 100% utilization, you could pay the balance that month with 0% then reported and your score will bounce back as though nothing ever happened.

Separately, if you have had this card for a long while you may want to request a credit line increase.