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You head off to college. You’re finally on your own truly feeling like an adult for the first time.  As you head to the cafeteria you pass a table run by a credit card company.  If you sign up today you get a free t-shirt.  Hey, you’ve wanted a credit card and it’s getting close to laundry day so an extra t-shirt will come in handy.  Fast forward a few years and you’re thousands in credit card debt.  Lucky you!
So you have a big balance that you built up on the card. Wasn’t too bright, you know.  You want to pay it back but you’re trying to make ends meet too.  You get your credit card bill and you see the minimum amount due.  The low amount entices you to pay it.  The extra money can go toward other things like food and rent.  Fast forward a few years and rather than your purchases getting paid off your amount due grows instead.  You look at the interest you’ve paid out and realize it was as much as the original items you bought!
How about this – You need a new refrigerator. You head to the appliance store and find one you like.  As you are getting ready to pay, the salesperson tells you if you open up a credit card with them there will be no payments for 12 months.  A year of no paying would be pretty good.  So you pay the minimum for 12 months.  On the 13th month you see a huge interest charge!  What you didn’t know was if you didn’t pay the whole thing off after 12 months you pay interest on the balance going back a whole year!  Oh, and the rate on the card is like 24%!!  And you thought you got a deal on the price a year back!
Here’s one – Yeah, you had a lot of credit card debt. But you worked your rear off to correct those mistakes and pay it off.  Hours of overtime and scraping by to make sure you don’t have to pay interest payments anymore.  You’ve tuned the page and you’re now a responsible credit card user.  The day comes where you have paid off your entire balance.  You now owe nothing.  Congrats!  You get a letter in the mail a few weeks later saying the credit card company is canceling your account now that your balance is paid off.  Seems you’re not credit worthy now that you’re responsible.
This one’s good – You know you have a high interest rate. You screwed up a few times in the past.  But you have been reliable for 6 months now with no late payments and you have been paying more than the minimum.  You heard that you can call the credit card company and ask to have your rate lowered.  Nervous, you call them up and explain the situation.  To your surprise the CC company is more than happy to lower your rate by a few points.  That wasn’t so hard!  It’s not until some months later that you find out that rate change only applies to NEW purchases.  The old balance is still at the higher rate.  And here’s the kicker – those payments you have been making?  That went to the lower rate balance while the higher rate balance sat back and accrued interest.
Have I mentioned credit cards suck?!?
Last one – You haven’t been the best with your credit card but you’ve been trying.  It’s been tight with the money and you are trying to stretch every dollar out.  Your credit card bill’s due date is the 2nd.  You get paid on the 30th and mail out your bill the day you get paid.  It doesn’t get to the CC company in times and you are charged a late fee of $35.  On top of that your interest rate goes up to 22%.  You call up the company and beg and plead but they won’t do anything since you haven’t had the cleanest credit record the past 6 months.  That $15 CD you bought just cost you a whole lot more!
Yup, credit cards can be killer!
I’ve been in a lot of these situation myself (I remember getting my first credit card on campus and received a Koosh ball too!).  Not fun times being stressed out with credit card debt.
How about you?  What are your credit card horror stories?  Tell me why you think credit cards suck!
Check out the other side of the argument: Credit Cards Don’t Suck, You Suck!
Glen Craig is married and the father to four children that he spends the day chasing as a stay-at-home-dad. He took an interest in personal finance when he realized most of his paycheck was going toward credit card bills. Since then he's eliminated his credit card debt and started on a journey towards financial freedom.
April 27, 2009 at 1:38 pm
Hahaha! Thanks for the great post. I agree that credit cards are rigged against the consumer. My big annoyance right now is that we got a credit card line cut — despite the fact that we are responsible. This is not good for our credit score, and will hurt us as we try to refinance our mortgage to a much lower interest rate.
@ Miranda – Credit card companies want to lesson their exposure and in return your credit score goes down. Nice one.
Miranda is not alone right now. The same thing is happening to thousands of people. It’s very unfortunate for people who have always used credit responsibly.
Patrick’s last blog post..How to Decide Whether to Be a Stay at Home Mom or Working Mom
@ Patrick – And that’s a damn shame. If you’ve been responsible then you shouldn’t be punished for it.
If you are responsible user of Credit Cards and payoff your balances every month, you may actually be able to take advantage of some great benefits as well (like cash back, or points).
I think credit lines being cut may be a blessing in disguise for many people who have not been too responsible. I didn’t know it affects your credit score.
Arohan’s last blog post..Socially Responsible Investing for “Values” Investors
April 27, 2009 at 2:43 pm
@ Arohan – Sure there can be good point to cards. And yes, for those who haven’t been so good with their credit having their limits lowered could be a good hings but it sucks that people who have been paying their balances off can get cut off. And without any warning too. As for your credit score, it can affect your debt to income ratio. And when your credit limits lower so does your perceived credit worthiness.
Bible Money Matters says
April 27, 2009 at 2:47 pm
Credit cards do suck, no getting around it. They suck your wallet dry, and then kick you in the teeth.
Bible Money Matters’s last blog post..In The Event Of An Emergency Series: Planning Ahead For Life’s Emergencies
April 27, 2009 at 2:59 pm
@ Bible Money Matters – Well said!
Baker @ ManVsDebt says
April 27, 2009 at 3:54 pm
Haha, fantastic post! I laughed out loud in several parts. However, the overall message is spot on. I for one can’t stand the industry. I think it’s disgusting and out of control. That’s why you can offer me all the 1.5% rewards in the world and I won’t ever carry a credit card again!
Baker @ ManVsDebt’s last blog post..Saving Money While Traveling And Some Mistakes We’ve Made
April 27, 2009 at 4:02 pm
@ Baker – I know there are a lot of people out there so sick of credit cards that they no longer us them. Credit card companies’ loss.
April 27, 2009 at 4:29 pm
We had the same thing happen to us through AIG. We used an AIG loan to buy a laptop, and our last payment was just a couple of weeks late – all that interest – $300.00 worth. It was infuriating!
April 27, 2009 at 4:37 pm
@ Jennifer – It’s like any discount you may have gotten is right out the door!
April 27, 2009 at 5:37 pm
Credit cards are awful. Anytime you are a day late with payment, most will kick your interest up around 29.9% (and charge a late fee too). Then it takes a long call, navigating through the computerized system, and you have to go up 2 levels of supervisors to get anything done (the first person you speak with is almost always too low on the totem pole to help you). I can usually get the rate lowered again after spending about 45 minutes on the phone, but what a pain!
April 27, 2009 at 9:40 pm
@ Rob – I hate those computer phone menus!
April 28, 2009 at 3:38 am
Credit cards do suck sometimes… That’s why I’ve been very careful with them. It involves a lot of trickery that fools people into spending more than they originally intended. Credit cards are good for emergencies & raising credit scores though, so it’s not all that bad.
April 28, 2009 at 9:08 am
Having had many credit cards myself and run up many debts, paid them off and promised to never use them again, but I do…!! I am a bit of a card tart, so I like to shop around using various comparison sites, trying to clear a bit still though!
April 28, 2009 at 11:13 am
While I certainly do not condone building up huge credit card debt as a young adult, I do think it can be a good idea to obtain a credit card during the college years to establish credit…as long as the card is being used for purchases like gas, and the balance is paid off every month. I did not get a credit card until after college but my husband did when he was 18 and always paid off the balance each month (we still do this). It turned out to be a smart move because it was helpful to have that established credit when we were buying our house and he was buying his car. It does take a great deal of restraint and self-discipline not to fall into bad habits at a young age, though!
April 28, 2009 at 6:52 pm
What I don’t get is people who sign on for those t-shirt promotions, or “Get $25 RIGHT NOW!” $25? Is it really worth it? But yeah, credit cards are a scam, until you really need one in an emergency, then: not so bad.
April 29, 2009 at 3:07 am
Yes, I agree, credit cards suck! Eleven years ago my son was paralyzed in a accident, I had recently acquired a credit card for emergencies, just didn’t think about this kind. Over the next year it was all about rennovations to the house and medical bills and supplies and has been ongoing ever since. A couple of months ago they decreased my spending limit even though I always paid more than the minimum and was on time. Their explanation was that I have had a credit balance on this account for too long. I guess by decreasing my limit, it is supposed to help me pay it off sooner. Not so. We needed it to survive at the time and I’ll probably be paying on it until my last breath.
April 29, 2009 at 11:16 am
Seems the only way to get around it is maybe to pay *almost* the whole balance each month… you know… give them some crumbs. But then, that’s just stupid!
July 21, 2009 at 6:09 am
Why not just pay the card in full and on time every month? That way you avoid finance charges, get a grace period, and the bank can’t suddenly raise your rates “just because.”
I’ve only had credit for a few years, but my middle FICO score is 747 and I’ve never had to pay a cent of interest. My credit card company makes money every time I charge something because they charge the merchant a fee to process the transaction. I only have one card, but my credit limit is $25,000. The most I’ve charged was close to $4,000 when I bought a DSLR (I’d saved up for it) and had to replace the side-by-side fridge/freezer and bought a spare upright freezer for the garage. (It has honestly paid for itself because I cook at home and can freeze leftovers or meats that I buy on sale.)
The problem with college kids is that MANY lack self control or know the difference between a want (pizza, beer, iPod, Wii, movie tickets, newest Mac laptop, Urban Outfitters wardrobe) and a need (if you get down to it, you can get clothes from the clearance section of Wal-Mart or at Goodwill, drink tap or filtered water, eat Ramen or “rice and beans”, and either live at the dorm or in a shared apartment or other living arrangement).
April 30, 2009 at 2:00 am
Sorry, I have to disagree. You can read why in my latest post. I don’t want to ramble on on here when I already rambled on on my own blog.
May 19, 2009 at 3:33 pm
Recently I noticed that Capital One wanted to raise my rates on existing balance or I had the option of paying off the card at my existing rate as long as I didn’t increase my balance. Well, I didn’t think much of their offer so I paid off the card, closed it, and opened a new card with my credit union. Credit unions are a much better place to get a card from since they are not-for-profit companies and are interested in doing good business with their members. Membership has its privileges.
May 20, 2009 at 2:43 pm
I’ve been looking at credit unions lately. They do seem like a good place to open accounts.
May 27, 2009 at 3:20 pm
I’d say IF you are going to do the credit card thing then do yourself a favor and only have ONE because ONE is managable and certainly ENOUGH. It’s when you have 2,3,4 or more that trouble begins to brew. I’d also recommend that at income tax time if you do have cards,use your refund to eliminate as many debts as possible and then cancel out those cards so you can’t rack them up again once they’re paid off. But if you are really in deep then there is always bankruptcy but remember that will ruin your credit (for awhile at least.)
June 9, 2011 at 1:00 am
I agree with what you said Henry. Just now I read on another site about people bragging about “free benefits!!!!”…which turn into Best Buy gift cards. WOWOWOWOWOW!!! You totally can’t get those for a birthday or something! Hell no! Spend lots and lots of money you don’t have and THEN get a free gift card! No wonder this country is so far in debt, huh? Apparently that same person I mentioned thinks they have “superior fraud protection” and that CC’s are a “superior choice for people who can manage their finances”. This guy used a card for his honeymoon, the plane tickets there and everything. It’s amazing people this dumb are in the world.
A Little About Me
I'm Glen Craig - I used to live paycheck-to-paycheck, drowning in credit card debt. I turned that all around and now I build wealth rather than debt.
My goal is to make personal finance easy for you.
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