Smart people learn from other’s mistakes. The not-so-smart people like to fight their own wars. Which one are you? A recovering Credit Card addict recounts his horror with plastic money.
How long have I been using Credit Cards now? Close to 11 years. And it’s been quite an experience.
Would I do things any differently if I knew better? Yes, very much.
You, dear readers, are among the lucky ones who get to learn from my mistakes. I’ve been there, done that and I’m proud to say that I’ve come out a better Credit Card user than before. Or maybe, I’ve just been scarred for life. Through the eyes of a recovering Credit Card addict – here’s what not to do with your Credit Card.
Additional Reading: Tidy Your Wallet By Cleaning Out Your Credit Cards
Forget You Have One
Let’s begin with something really stupid. It’s so stupid that I question my existence sometimes. And yes, it happened. Let me explain. Making a bold (or stupid) statement here. Don’t forget you own a Credit Card, especially if there’s an outstanding balance on it. My first Credit Card, ladies and gentlemen. I forgot I had it and I paid heavily for it (no pun intended). It sounds crazy but hear me out. So, I’d used up about Rs. 25,000 on the card. This was a few months after I was issued the card. I’d paid the bill a few times and knew, in general, how Credit Cards work. I worked for a bank, you see. But then, it happened. I just forgot about it. Yes, just like that. Now, I didn’t get a bill payment reminder or a call from the bank to let me know this had happened. Around that time, I moved houses as well and got another number. Now, I don’t know if someone tried to get in touch with me or not, but in all honesty, I didn’t hear from anyone. Many years later, I was interested in another card. Even then, it didn’t hit me that I used to own one. I was also considering a Car Loan. That’s when it happened. I checked my Credit Score and my heart plummeted. I went through my credit report in detail only to realise what I’d done. Long story short, I ended up paying almost three times the original outstanding amount because of the accumulated interest and my Credit Score took a fair bit of time to recover from the shock. But recover, it did. That’s a story for another time.
Love Colonel Sanders Too Much
Did you just do a double take on the title? Yes, you read that right. If you thought forgetting that I had a Credit Card was crazy, well, you’re in for more surprises. So I’ve got more cards over the years. One in particular, I maxed out eating fried chicken every day. Oh, the limit on that was in six figures, by the way. Go back and read it again very slowly. Let it all sink in. I could say that corporate life got the better of me and fried chicken was my solace. But that’s only 100% true. I racked up that huge bill in over two months. Before you judge me, it might interest you to know that I’m a good friend. I wasn’t going to be the only one with clogged arteries. I was treating my entire group of friends to some good ol’ fried chicken every other day for over two months. Yep, that’ll make your Credit Card hit the six figures sooner than you think. Fried chicken in hand and teary eyes, I dipped into my savings, paid the entire outstanding and vowed to never use my Credit Card again. I actually closed the account, which again, wasn’t a good idea.
Additional Reading: How To Read A Credit Card Statement
Underestimating Small Expenses
Wait, there’s more. This is slightly more digestible and not from the ‘Advanced Stupidity’ syllabus. Best to know something about me here. I buy things often. Could be a bottle of Smart Water, guitar strings or a phone cover. Mind you, these aren’t expensive items for the most part. Usually between a hundred rupees to a thousand. These purchases shouldn’t really affect my finances that much, right? Wrong! If you use your Credit Card for all these tiny purchases, it’s crazy how much they add up to. Also, since it’s not going from your Savings Account, you sort of turn a blind eye towards the Credit Card expenses. Or is it just me? Very well could be. I was racking up this huge bill every month and I knew what was happening, but just wouldn’t admit it. I stopped one day. It’s been better since.
Additional Reading: Credit Cards That Can Actually Save You Money
All right. There are other points I could talk about, but then you’d really judge me.
Today, I can proudly say that I’m a responsible Credit Card user. I know how to use them and haven’t paid any extra charge in a while. I rack up a good number of points too. I’ll talk about how one should use a Credit Card in a different article. Mind-boggling stupidity and pearls of wisdom from the same person in the same article – a bit too much to take in.
Using Credit Cards isn’t rocket science and it just takes a little bit of understanding on how they work and setting some ground rules for yourself. I’m sure you’re all sensible folks and could reap all the benefits that plastic money has to offer.
Care to check out some offers?