What I Wish I’d Known

In the spring of 2001 I found myself checking the mail daily, hoping that my very first credit card would arrive. My mom, who was always right – just ask her – had warned me of the dangers of having a credit card.

“Credit cards can be dangerous if you do not use them wisely” she would say to me often.

That advice, coupled with my lack of income, kept me from applying for a credit card when I turned 18. Now, however, I was 19 and much more mature. I had a thriving career in customer service, I was excelling in college and I was living on campus. I was, for all intents and purposes, an adult… and adults have credit cards.

When my credit card finally did arrive I tore through the envelope with little regard to the paperwork included. Just seeing my name embossed across the front in shiny silver letters was glorious. I’m pretty sure as I stood there a chorus of angels sang from the heavens above. Within an hour of receiving and activating my card, I was at dinner with some friends giving my card a spin. As I swiped it through the card reader to pay for my meal, the motion seemed flawless. No longer did I have to worry about typing my PIN. I could merely swipe and go.

I was hooked.

For the next few months I used my card for everything I could think of. Dinner, movies, online purchases, gas, etc. Nothing was off limits. The best part was that as long as I made a minimum payment each month, the card would stay open and I was free to use it. No longer was I forced to wait for my check to deposit before spending money. If I wanted something, I could simply charge it.

Life was good.

It was six months into my sojourn as a credit card holder when the bottom fell out. I received a letter with my monthly statement that informed me that the “introductory APR” (Annual Percentage Rate) was expiring. The letter went on to say that my new APR would be double that of my current rate. Instantly my minimum payment went from a manageable amount to a number I could scarcely afford. When I found myself unable to make a payment, a late charge was assessed, causing my minimum payment to become even more impossible to pay. Despite working overtime and cutting out frivolous spending, I was just not able to keep up. Every payment I made reduced the balance by nothing more than a few dollars. By ten months I was receiving threatening calls and harshly worded letters with legal terms I did not understand.

By twelve months the credit card was closed and the amount owed was sent to a collection agency. My first foray into being an adult had fallen flat.

Thankfully, since that time, my financial situation is much better. If I could, I’d go back in time and give the old me a little advice. Since that’s not possible, I’ll share my advice with you. Perhaps it’ll help you avoid the same pratfalls I experienced when obtaining my first credit card.

• Pay your bill on time – Late fees can add up quickly and late payments can really hurt your credit score. If you are unable to remember when your bill is due each month, set a reminder on your phone or visit the credit card company’s website and set up automatic payments.
• Cash Advances are not your friend – A cash advance often has a higher APR than a normal purchase and likely will come with a fee. If, for any reason, it is necessary,  do your research first.
• Be leery of credit limit increases – As with cash advances, credit limit increases can have a fee associated with them. Also you should note that sometimes a credit limit increase will require the credit card company to pull your credit, which could hurt your overall credit score. Just because you qualify for a higher credit limit does not mean you need to accept it.
• One is enough – Once you apply and qualify for your first credit card, you will begin seeing offers from other credit companies pouring in. Do not be tempted to apply for these cards. Until you are good at managing one, there is no need for a second.
• Budget – Before you even consider applying, be sure you make enough income to add an additional bill to your monthly expenses. If you’re barely getting by before a credit card, chances are you’ll only struggle more with one.

I know these seem like very “adult” things to consider, but having a credit card is an adult responsibility. If you have questions there is no shame in talking to someone who already has a credit card and asking questions. If that seems off-putting then you are more than welcome to walk into any of FTWCCU’s 12 branches across the Fort Worth area and speak to a representative. They’ll be more than happy to assist.

We all started somewhere, right? That’s something I wish I’d done. Good luck!

This post was written by Domingo Garcia, FTWCCU Lending Administrative Assistant.