5 credit card mistakes you should avoid making

5 cautionary credit card tales

Confronting money problems is sometimes so scary we just…can’t. But conquering that fear gets a lot easier when we find out we’re not alone. After almost thirty years in personal finance, let me tell you: If you think you’ve messed up in some uniquely spectacular way, you haven’t. You could start a wine-tasting group with the people on your block who’ve made the very same money mistake you have. (It might not help your wallet, but you can all cry together into your rosé.)

Consider the credit card, our wallet-sized frenemy. While it’s true that millennials are less likely to lean on their cards as hard as older generations did, plastic can get anyone into trouble if it isn’t handled right. Here are just five of the many tales of plastic woe—and whoa!—that real people have shared with me in recent weeks: How credit cards mystify us, mesmerize us, lure us into naughty spending behavior, and sometimes teach us to be better with our money. Read on—you might find a few new friends for that wine club.

The seven-year spree

“In college, I went to Puerto Rico for spring break with 10 of my friends. I remember being able to afford the cheap flight. But I didn’t have the cash to cover hotel, food, and going out, so I decided to put it all on my credit card, which at the time felt like extra money to me. In total, I spent $600 or so for a week’s trip—definitely a lot for a college kid earning $7.25 an hour at a part-time job.

“Since I thought I only had to pay the minimum, that original balance ballooned to more debt with the interest. Also, because I felt like I could pay it off ‘when I entered the real world,’ I quickly let that debt climb during my last year of college. After I graduated and got my first job, I stupidly hoarded all my money because even though I was living at home rent-free, I wanted to save to move out as soon as possible. My entire mentality was, ‘I’ll pay it off when I get more money,’ which just meant I kept charging things even though I couldn’t afford to. And that’s how I went from $600 to $8,000 in credit card debt.

“I finally paid it off—seven years after that spring break.”

—Gail, Boulder, Colo.

The wrong hands

“My first credit card never reached me. It was stolen out of our mailbox, and nobody found out. (I was in college and assumed my mom had received it at home.) About three months later, I got a call from a sheriff in Orange County. Turns out a couple had been stealing and charging up credit cards, and my card had been recovered along with more than 10 others.

“Since there was a sheriff’s investigation, my credit card company didn’t give me any trouble about the charges and gave me a fresh start. But I should have checked my statements and been proactive about knowing where my credit card was.”

—Millie, Sacramento, Calif.

Beware the price of points

“When I got a Delta American Express card for the travel benefits, I didn’t realize the amount that I’d be paying in interest if I didn’t pay it off in full each month. I had a singing gig, but it wasn’t very well-paying, so I just made minimum payments on the card for a long time. The interest added up substantially.

“Since then, I’ve done two balance transfers to 0% APR cards and am working on getting that sucker paid off for good. Amex has made lots of money off me so far. It’s very upsetting. I keep thinking this will be the year I can get out of debt. Then life happens—unexpected moves, gigs, jobs, surgeries. I’ve been lucky to have help from my parents, but I should have summoned the courage to ask for help much sooner.”

—Davida, Atlanta

How to be your card company’s favorite customer

“My first mistake was not knowing that with good habits, I wouldn’t have to pay for the privilege of using plastic. Coming from California to New York, I had a Wells Fargo credit card during college that I used to pay for dinners out and entertainment—stuff I couldn’t afford on an allowance from my parents and wages from campus jobs. So I carried a balance on my credit card and incurred an additional finance charge (the interest) every month. I didn’t even pay consistently every month, so there were late fees, too. While I was annoyed by these costs when I looked over the bills, I figured the charges and fees were just the price to pay for the convenience of having a credit card.

“These days, I’m out of debt and I never pay fees. It’s hard to believe how warped my thinking was back then.”

—Ben, Brooklyn, N.Y.

The ghost card

“After college, while living back home for a year, I paid my card off entirely and let it slide into dormancy for several years. I didn’t even know where the card was. Eventually, the card company wrote to let me know that my card had been cancelled. This card cancellation due to inactivity had wiped about eight years from my credit history. I later learned that those years had some value, because length of credit history counts for 15% of your credit score. I regret not keeping that account open.”

—Denise, Pittsburgh

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