Financial hardships are truly one of the most difficult things I pray I never have to experience in this world, especially those related to having or using a credit card. After all, this is a valuable financial tool that I use from time to time to purchase necessities and other items.
However, I know that not everyone is as fortunate as me when it comes to handling finances and their credit cards. Many even come across credit card horror stories, which I acknowledge could happen to just about anyone, even me.
Given this, I want to point out the different credit card horror stories that are most prevalent today and how users like me can learn from these mistakes. To learn more about this, read on.
- Maxing Out Credit Cards
- Never Using Your Credit Card
- Getting A High Credit Card Interest Rate
- Missing Credit Card Payments
- Fraudulent Purchases And Identity Theft
Maxing Out Credit Cards
I love a good fashion find just as much as the next person, but I often think twice about making any high-ticket purchase, especially from designer brands. Not only does it cost a pretty penny, but it can also mean the difference between responsible spending and paying balances for a long time.
One of the films that I have loved and have taught me a lesson about using and maxing out credit cards is Confessions of a Shopaholic. This particular film showed Isla Fisher as Rebecca Bloomwood, who loved fashion and who loved shopping even more, to the point she maxed out her credit cards to buy clothes, scarves, and other fashion items.
Bloomwood loved shopping to the extent that her credit card was being declined after being maxed out and failing to pay her debts and bills, making these pile up even more.
In many ways, I find that this is a relatable experience for many, particularly when it comes to being impulsive and living life to the fullest.
Make This A Learning Experience
The 2009 film has a turning point, so I would not be too quick to make judgments. Since the movie attempts to comment on being more financially responsible, it also presents Bloomwood waking to a cold, hard truth – that she would have to pay off her debts and turn her life around.
What I find particularly inspiring from the film is that Bloomwood took control of her life and this credit card horror story of hers and instead sold her precious things to sort out her problems. She also lived within her means from then on and enforced strict financial measures.
I want to emphasize that for credit card dues to stop piling up and to not have your card declined and rejected; I believe it is important to pay balances not just on time but also in full. This way, I can avoid the cloud of debt hovering over me.
Never Using Your Credit Card
After getting my credit card, I thought about only using it for emergencies and never using it until it is necessary. This way, I would not have to worry about overspending and other card-related concerns.
However, I have discovered from a friend of mine that doing so can backfire. Not only can my credit card be canceled, but it can also make my credit score stay the same or even become weak. It can even lead to fraudulent charges without me knowing.
My friend left her card at home for safety purposes, only to find out a year later that her card was no longer working when she needed it the most.
Not using a credit card might not hurt my finances, but I learned that it could have a negative impact on my credit score if this is canceled by the bank or lending institution that provided me with this product. This potential dip in my credit score can lead to higher rates, or worse, not having my card for necessities.
Using Your Credit Card Responsibly
To find a workaround on this matter, I found out that my friend started using her credit card for smaller items, such as grocery purchases and the like. I believe this is a great way to prevent credit cards from being tagged inactive.
From this mishap, I learned that keeping my credit card inactive was doing more harm than good. To keep this from happening, I plan to use my credit cards or even put these in rotation so they could all get good use every so often while still staying within my means.
Getting A High Credit Card Interest Rate
I find that there are many credit cards on the market today that offer relatively lower, if not competitively-priced interest rates. This makes it all the more inviting for prospective cardholders to apply and get one for themselves.
While I read the fine print and go through the terms and conditions page of the card issuer and the credit card itself, not many people do. This can lead to cardholders being subjected to a much higher interest rate than they originally thought they would have.
I have read an instance where an individual qualified for a credit card that had a 29.9% interest rate, a good deal for people who have limited or fair credit scores. However, this person was caught blindsided after the interest rate crept up to a whopping 79.9% after six months, leading her to pay outrageous fees.
Finding The Right Workaround
In this case, the person I am talking about resulted in canceling her credit card from the card issuer. However, the process of canceling this took six months, making her pay more fees in the process.
To avoid falling into this situation, reading the fine print is the way to go. This prevents me from encountering any unwanted surprises along the way, especially when I have gone over the fees and charges and the terms correctly.
I would also advise finding a credit card that has better interest rates and lower fees. There are now credit builder cards that are perfect for those with less-than-perfect credit scores and those who are just starting.
Missing Credit Card Payments
I always make sure that my statements are paid off when the due date comes rolling in. Unfortunately, this is not always the case for everyone. I have come across a credit card horror story where the person kept on missing credit card payments due to his irresponsibility.
The person in question, albeit working, failed to open or even keep tabs of his transactions until it was too late. Because of this, I found that the person was haunted by debt collectors and even the banks, leading him to dread and ditch these calls altogether.
As I might have guessed, his debt ballooned, leaving him to worry and work off his debt over time. While he paid off his debts and balances, I believe that the effects of the incident were lasting enough, with his credit score lowering by a great deal.
How To Bounce Back
To get up from this kind of ordeal, I advise individuals and other cardholders to automate their payments so that they can easily pay for their balances, just like I do. Alternatively, I find making extra credit card payments much easier since this also frees my line of credit.
I also advise looking through the statement balance and paying this off in full, as much as possible, even before the monthly due date. Doing so helps me save more money by avoiding paying interest charges and gives me a better opportunity of getting a higher credit score.
Banks and other lending institutions often give us the option to pay the minimum balance required. While this is acceptable, especially for those who are pressed for money at the money, I find that paying off everything in full gives me the peace of mind I need knowing I would not have balances to carry over from one month to another.
Fraudulent Purchases And Identity Theft
Over the past year, I noticed that there had been a significant rise in identity theft and fraudulent purchases, especially due to data breaches and other similar cybersecurity incidents.
I have read various instances where individuals make various fraudulent charges on a credit card, even reaching thousands of dollars, such as a man from Colorado who made over $300,000 worth of transactions using 19 different credit cards. This can be pretty surprising to cardholders like me.
Reporting This Right Away
One of the things that I would do if ever I were to get in that situation is to immediately report this to my credit card issuer. I would also file an affidavit that states my credit card was compromised. I would also take the time to place fraud alerts on my credit reports.
To further amplify my efforts and prevent this from happening again, I believe that signing up for credit monitoring services through my credit card issuer should be my first line of protection. This alerts me of any fraudulent transactions made under my name.
It is also important that I monitor my credit statements to see if suspicious purchases or transactions were made. Another extra step I take is to ensure that the website or place I am going to shop at is secure.
The Takeaway
These credit card horror stories truly make for experiences that everyone can learn from. With these incidents, I can present that although there is a dark side to credit cards, these stories are opportunities to learn how to be better when it comes to handling finances.