Could one person with a card with no spending limit pay off everyone's debt?
The problem would not only be that of Kyle but also that of American Express. When Kyle pays by credit card, American Express pays the bills out of their pockets on his behalf and then forwards the bill to Kyle. The issuer of a credit card takes the risk that the holder of the card won't pay the credit card bill. In practice there are safeguards in place which prevent a company like AE to pay such huge sums in one day through an automated process. Credit card companies have sophisticated algorithms to determine unusual spending patterns and block any transactions which appear unusual. Also, after a few billions their bank will likely block them and prevent them from paying any more bills. But let's play along and pretend these safeguards wouldn't exist. That means after Kyle's spending spree, American Express will be trillions in debt, with their main debitor being a 10 year old boy who won't ever be able to pay. Kyle will have to declare personal bankruptcy. There are various variants of bakruptcy in the US, but they basically all boil down to him paying everything he can pay (not much considering that he is 10) and then defaulting on his debt. Afterwards he is debt-free. That means the debt is now that of American Express. American Express will not be able to pay that debt with their bank(s) either, so they will have to declare bankruptcy and default on their debt too. This domino effect passes the burden on to the banks which can not carry a trillion-level debt either. A bank going bankrupt is a serious issue because it means they can not pay back any of the money in the saving accounts hold by companies or private people with them. So the problem would return to those people Kyle wanted to help in the first place. Also, the collapse of one bank will often result in the collapse of further banks, resulting in a collapse spiral destroying the whole world-wide finance system. Nothing would be gained.
I don't think there's any law against having lots of bank accounts. But what are you really gaining? Every new account is a paperwork hassle. Every new account is another target for con men who might steal your information and write bad checks or make phony credit card purchases in your name. Yes, it's not unreasonable to have a credit card or two that you keep for emergencies. I'd advise anyone with running up debts while having no idea how you will pay them off. But to say that you might keep some credit available so that if you have a legitimate emergency -- like, say, your car breaks down and you don't have the cash to fix it and you can't get to work without it -- you have some a fallback. But do you really need ten credit cards for that sort of thing? And how much credit are they giving you on each card? I don't know how the banks work this, but I'd think if they're rational, they'd consider your total credit before giving you more.  I have three credit cards that I use regularly -- two personal and one business. And I find that a real pain to keep track of, to make sure that I keep each one paid by the due date and to keep a handle on how much I owe and so forth. I can't imagine trying to deal with ten. I suppose you could just stuff all these cards in a drawer and only use them in case of emergency. "Your companies are declining to lower your rates because you are describing it as being kind. When I was in a similar situation, I called each one, starting with the highest rate, and said this: For the last little while things have been tight and my balances have crept up on all my cards. Now I'm about to start a fairly dramatic paydown. I'm going to be doing highest-rate fastest, which is you. Are you able to lower my rate so that you can continue to collect it?  Some said no. Some said ""ask again when you've paid more than the minimum three months in a row."" Most said yes, and sometimes by a dramatic amount. It made a real difference to getting things under control. I agree with the other answers that $50 extra on each card is just not as fulfilling as putting all the extra to a single card. If you must still use a card (to put gas in your car, buy groceries etc) getting one card to zero will return you to not paying interest even when you use it, so you might want to start with your lowest balance and then go to highest-rate once you have one clear one you can use. (If your balances are all so high that it will take a year or more to get one to zero, then maybe not. But if one is low drive it down first.) As for the consolidation loan, for some people it's the key to saving interest and getting the debt behind them. For others it's a chance to catch their breath and run up even more debt. Most people cannot predict in advance which they will be or which others will be. Be aware that it is a risk. You can vow that you will never again cover payroll with a cash advance from the company credit card (or your personal one) but when push comes to shove, you just might anyway." We have a pre-paid mastercard.  This will only allow the spending up to the amount already paid into the card account.  Visa Electron is a bank account linked debit card that will not allow the account to go overdrawn but this card type is getting quite rare. I would say generally, the answer is No.   There might be some short term relief to people in certain situations, but generally speaking you sign a contract to borrow money and you are responsible to pay.  This is why home loans offer better terms then auto loans, and auto loans better than credit cards or things like furniture.  The better terms offer less risk to the lender because there are assets that can be repossessed.  Homes retain values better than autos, autos better than furniture, and credit cards are not secured at all. People are not as helpless as your question suggests.  Sure a person might lose their high paying job, but could they still make a mortgage payment if they worked really hard at it?  This might mean taking several part time jobs.  Now if a person buys a home that has a very large mortgage payment this might not be possible.  However, wise people don't buy every bit of house they can afford.   People should also be wise about the kinds of mortgages they use to buy a home.  Many people lost their homes due to missing a payment on their interest only loan.  Penalty rates and fees jacked up their payment, that was way beyond their means.  If they had a fixed rate loan the chance to catch up would have not been impossible. Perhaps an injury might prevent a person from working.  This is why long term disability insurance is a must for most people.  You can buy quite a bit of coverage for not very much money. Typical US households have quite a bit of debt.  Car payments, phone payments, and either a mortgage or rent, and of course credit cards.  If income is drastically reduced making all of those payments becomes next to impossible.  Which one gets paid first.  Just this last week, I attempted to help a client in just this situation.  They foolishly chose to pay the credit card first, and were going to pay the house payment last (if there was anything left over).  There wasn't, and they are risking eviction (renters).     People finding themselves in crisis, generally do a poor job of paying the most important things first.  Basic food first, housing and utilities second, etc...  Let the credit card slip if need be no matter how often one is threatened by creditors.  They do this to maintain their credit score, how foolish. I feel like you have a sense of bondage associated with debt.  It is there and real despite many people noticing it.  There is also the fact that compounding interest is working against you and with your labor you are enriching the bank.  This is a great reason to have the goal of living a debt free life.  I can tell you it is quite liberating. The first thing I assess when looking at new credit cards is whether it has no annual fee, the second thing I look at is how long the interest free period is. I always pay my credit card off in full just before the due date. Any rewards program is a bonus. My main credit card is with CBA, I have a credit limit of $20K and pay no annual fee. I get a bonus point for every $ I spend on it, for which I exchange for store gift cards to help with my everyday spending. Approximately 3500 point would get me a $25 gift card. But my main reward with the card is the interest I save by keeping my own money in a Home Loan Offset account whilst I spend with the Bank's money. Then I pay the full amount off by the due date so I do not pay any interest on the credit card. I only use my credit cards for purchases I would usually make anyway and to pay bills, so my spending would be the same with or without a credit card. I can usually save over $500 each year off my Home Loan interest and get about $350 worth of gift cards each year. If I didn't have any Home Loans then I would keep my money in a high interest depost account so I would be increasing my interest payments each year. Sure you can probably get credit cards with more generous rewards programs, but how much are you paying each year in annual fees, and if you don't have an interest free period and you don't pay off all the amount due each month how much are you paying in interest on the card? This is what you need to way up when looking at rewards programs on offer. Nothing is for free, well almost nothing ! Yes, if somebody puts you in a  multi trillion dollar deficit...yeah, it may take 60+ years to pay it off.   Lets say your spouse racked up a few million in bills....that you are responsible to pay pack...how long do you think the fault will lie?  Also, don't forget to add in lost opportunity costs of not being able to do anything else but pay back bills. Pay them off immediately. But, as I note in my article Too Little Debt?, a zero utilization is actually a negative hit. So you want to just use the cards to get over 1%. i.e. if the lines add to $38K, just charge say, gas and some groceries, $100/wk. Pay in full every month. It's the amount on the statement that counts, not the amount carried month to month accruing interest, which, I hope is zero for you from now on. I plan to stay debt free, but I appreciate the non-debt-related advantages of having a good credit score. If you plan to stay debt-free, then opening up more cards will not significantly change your credit score.  You seem to want to be going from a good score to a great score, which adding cards alone will not do.   Also, I highly doubt it will significantly affect any of the five things you mention.  If you had a bad credit score, then I could see some effect on renting an apartment, getting a job (where trust with money is a component of the job), etc., but don't try to game the system for some number. You won't magically get cheaper cell phone rates, lower insurance premiums, etc. "You don't need to have a bunch of credit cards lying around; just a couple is fine. Get a ""rewards"" card (without annual fee) that pays you back for use, and use it regularly to buy groceries, for example. Pay it off promptly each month, using the rewards, if you like, to reduce the amount you have to send in. Or you can use the rewards for other purchases; some merchants offer $25 worth of merchandise for $20 in rewards. It used to be the case that you could negotiate a discount for paying cash rather than use a credit card, but that is a lot harder to do now, in many cases because credit-card company contracts with merchants prohibit this practice. Also, merchants often prefer credit cards rather than cash because money-handling is an issue (pay for an armored car to come pick up the day's receipts, or risk getting mugged on the way to the bank, possible burglaries if you leave the money overnight in the store, daily balancing of cash-register trays, etc.) So, not being in debt and being rich enough to not need to be in debt are laudable goals, and you have my best wishes that you will reach them soon, but getting rid of all your credit cards as a part of not being in debt may be more trouble than it is worth. Keep a couple, pay them off promptly, and if you are concerned about being in debt, you can time your charges so that you are in debt at  most 2 or 3 days each month." 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. Credit is not free money. The idea is you will repay all of it, within a reasonable amount of time. It is abundantly clear you either don't really understand this concept or completely failed at planning for it. Or even at keeping up with how much you owe - you are curiously blaming the bank for letting you go over the limit. The reason most banks will authorize that for credit customers is they don't want to strand people in some sort of an emergency situation. I'd recommend you cut back on your spending and work on paying the balance down. If you have been charged any over the limit fees you can attempt to negotiate getting those credited. Most banks will compromise on that the first time. I don't really recommend it, but if there are some circumstances surrounding this that are temporary and you are very confident about being able to manage money better in the future - chances are you might be able to get approved for another card. If you otherwise have had some good credit history and this situation is very recent, it may not even show up on your credit report yet and another bank might happily approve you. They may even offer a low or zero interest (for some time) balance transfer deal, which you should use to get the other card within the limit. If that ends up working, it's very important that you keep in mind having dodged the bullet once doesn't mean you will ever be able to do it again. Get your budget in order and pay things off. Apparently it is up to the credit card company on how they want to report your available balance. Another disadvantage to the no-limit   credit card may not be apparent to   most people, but it is something noted   by organizations like The Motley Fool,   which is expert in many issues of   finance and investment. Part of your   credit  score, about 30%, considers   the amount of money you have borrowed,   and the limit on your present credit   cards. A no-limit credit card company   may report your limit as $0 if you   have not used the card, or they may   report  a maximum limit available to   you. They may not, nor are they   obligated, to report times when you   put tons of expenses on a credit  card   and then paid them off. While some companies will report your   timely payments and paid off amounts,   others simply report an extremely low   limit. For instance if you spent $100   US Dollars (USD), your limit might be   considered $100 USD, or it may merely   be reported as zero. You’ll need to   check with a credit card company on   how they report payments and limits on   a no-limit credit card before you   obtain one. Some people who are   scrupulous are paying off their cards   at the end of each month suffer major   losses to their credit score, without   even realizing it, if their spending   ability is rated at zero, or their   payments don’t count toward showing   credit worthiness. Source No.  It means each month the total amount you owe goes up by a factor of (1+0.298/12).  So if you owed $23K at the beginning of the month, at the end you owe a total of 23K*1.0248=$23,571.  Then subtract the $804 you are paying.  If you want to think of it in terms of interest and principal, you are paying $571 a month in interest and 233 toward principle, I guess. Paying off debt with a lower interest rate using debt with a higher interest rate is throwing a lot of money away and impoverishing yourself needlessly.  Psychology can't get around that.  If you want a psychological aid, decide how much you are going to pay toward these debts and have it automatically deducted from your paycheck so you never see it. Make the minimum payment on every debt you have except the one with the highest interest rate.  Pay the very most you can toward that.  Then when it is paid off, move to the next highest.  Do all your spending out of the lowest rate card, or avoid using these credit cards until your financial discipline and resources allow you to pay all credit cards off completely at the end of each month. The optimal way to pay off all cards in the least amount of time is a waterfall approach, with the most money going to the account with the highest interest rate, or in the event of a tie, the lowest balance. Then when that account is paid off, go to the next one. There's a bit of wiggle room if one is tax deductible, but in this case, there shouldn't be. So, what you should do is pay off card 2, then 1, then 3, using the waterfall scheme. You have correctly identified that card 2 will be paid off in 18 months. Figure out what the balance will be on Card 1 at that time, and how long the new payment of $1105 will take to get it paid off. Then figure out how long it'll take to pay off card 3 with $1365. Without crunching the numbers myself, I'm guessing you'll be debt free in about 26 months or so, that card 3 will be paid off before you are done with Card 1. So what you'd do in that case is pay off card 1 using the combined total payment. "I understand the answers addressing the question as asked. Yes, inheriting a 401(k) can be a convoluted process.  In general, it's best to transfer the account to an IRA after separation from the company to avoid the issues both of my esteemed colleagues have referenced.  Given the issue of ""allowed by not required"" the flexibility is greater once the account has been transferred to an IRA. With few exceptions, there's little reason to leave the account with the 401(k) after leaving that company.  (Note - I understand the original question as worded can mean the account holder passes while still working for the company. In that case, this wouldn't be an option.)"