Personal finance tips and advice on money and investing to increase your financial intelligence and welfare

My Credit Card Horror Story

My name is Marlene Kraft, and this is my credit card horror story:

License: Creative Commons image source

License: Creative Commons image source

There are so many sites these days that offer credit card help, and it can be absolutely overwhelming. I have only owned one credit card in my entire life, one that I got in order to buy Christmas gifts for my son. It was a store credit card, not a Visa or Mastercard, with a limit of $500. However, I ended up spending the entire $500 because we needed several things for our home and that store happened to carry most of them, though they were priced higher than similar items at other stores that I shopped at. That is really the one bad thing about store specific credit, that you often spend more simply because you have a line of finance available at that one store, especially if you don’t have any credit at any other stores carrying the item that you need. I am not eligible for ‘normal’ lines of credit, unfortunately, because I am a disabled single mother.

The card that I got with the $500 limit didn’t help my bad credit situation, either, because I could only pay the minimum amount, and that meant that I could not pay it off due to the accumulation of interest. Within a few months, I owed nearly $900 to the company that issued the credit, and was still only making the minimum payment. I was not able to make even the minimum payment for a few months, and so the account accumulated late fees and was soon over $1000, twice the amount of what I had been able to purchase with it.

I was able to get a free account with a few credit agencies because my son’s school had their computer records compromised and the school system paid for the students and parents to have memberships for a year to make sure no unauthorized transactions were done under their name. So I was able to finally look at my credit score and how various factors influenced it A lot of it didn’t even make sense to me – I don’t quite understand why some purchases affect your score more than others, but I highly recommend that everyone take a class on credit before ever applying for a credit card, based on my own personal experience of how it has affected my life.

I never really had a choice, considering I was a college student who was heavily in debt, trying to make it on my own as a single parent while waiting on the government to decide whether they considered me disabled or not. Still, I think if I had taken a class detailing the pitfalls of spending your entire credit card limit, I would not have purchased gifts that year, and would have instead used it only for the absolute necessities of the household. I ended up spending three times as much on a Nintendo Wii as it was worth, due to interest and penalties such as late fees. I didn’t even know at the time that there are places which offer free classes regarding credit cards, or I would have asked for help from those teachers. Instead, I suffered through this experience alone and have an intense dislike for any line of credit, not that any are available to me now due to the delinquency of that one account.

About the Author: Marlene’s credit card horror story is not uncommon in the U.S.  Fortunately, non profit credit counseling is available to help every credit card horror story to a happy ending.