My First Credit Card – The Root of All Evil?
I was wondering about how it all got started. How did we as a nation get started in the belief in debt. What happened to the concept of saving up for something when you wanted to buy it, rather than buying it right away on credit and paying for it later.
In this article, to investigate my idea, I asked a friend to recall how she first started using credit…
The day I turned 18, I began receiving two to three credit card offers by mail, daily. As a teenager, I thought this was awesome! If I was receiving these “You’ve been pre – approved!” offers, then that means I must have pretty good credit, right? I thought that the more offers I got, the better my credit must be. I did not see in a need in reading the fine print, because to me, if I had a credit card, I could buy whatever I wanted, whenever I wanted!
I moved away from home and went to college only to find that I was never approved for all of these offers I got in the mail. How was I supposed to change my credit score if I never got approved for credit? Then, my sophomore year of college, my whole life changed.
I received an offer from Household Bank for a credit card for people with no credit history. This was an awesome opportunity! I signed up, got approved, and started spending. There was no stopping me from buying whatever I wanted, until I got my first bill. I opened the bill only to find that my $150 in purchases had turned into a $175 bill. How did this happen?
I did not educate myself with the literature I received from the credit card company. I was unaware of the fees for everything from signing up, to an annual fee, to an APR on all of my purchases, even though the idea of charging fees for borrowing money has been around since the early 1900′s. For me, my credit cards were a way to buy things that I otherwise would not have had the money to buy and trust me, there were a lot of things I wanted to buy.
One credit card turned into two and two quickly turned into five. Why did I have all of these credit cards? I only really needed one that I could use anywhere, but department store cards were so hard to resist. If I had a Target card, and got rewards for using it, Why not get rewards for shopping at Target?
As you can very well imagine, this got me into a lot of trouble. Even after I learned my lesson, paid my cards off and closed some of them, I fell into the same credit card trap. I paid my Victoria’s Secret balance down to zero and closed it, only to go back into the store and re-open it one week later! I just could not resist those awesome rewards for “VIP Angel Card” holders.
Four years later, I’m still paying off my credit card debt, as if I don’t have enough student loan debt to go around. The best advice I have for any young college student looking to build their credit is this: Get one card, put it in a locked safe, throw away the key, and then put that safe in block of ice and in a deep freezer. This way, in order to use that shiny new credit card will be to unfreeze your safe and call a locksmith! Oh, and in case you were wondering, lock smiths aren’t cheap either!
As we see, credit card companies are in the business of getting young people hooked on credit (and the thought of instant gratification of their wants) because they make a lot of money from the practice. I believe in personal responsibility, but it does have an eerie familiarity to a scene of a crack dealer giving out free sample across from the school yard.
Image provided by Koramchad
[This article was featured in the Carnival of Personal Finance at Weakonomi¢s.]