Wednesday, February 14, 2007

Plastic Dangers

I've steered clear of credit cards for a long, long time.

They sucked me in early, luring me to their sign up tables at a young and naive 18 or 19, waving t-shirts and water bottles and other trinkets to draw me in.

I signed up for a couple credit cards at a young age.

And it became trouble - the 300 dollar credit limit would get charged up, and then sit unpaid for months, accruing late fees, non payment fees and other charges.

Visa made a fortune off of a kid who signed up without a steady source of income.

I managed to pay off the card and extensive fees (there's something really wrong when you bill a college student $1200 for 300 bucks in charges) and cut those cards up for good years ago.

I've operated on a cash only basis ever since.

Trip to Europe - paid in cash. A nice wedding gift - paid in cash. A piece of jewelry to mark a special occasion - paid in cash.

There's some satisfaction in enjoying a trip, a meal or a piece of clothing knowing it's paid for.

The trouble is - I'm not really doing anything to build up my credit. What credit I do have (thanks to those bad credit cards and a few other indiscretions) is not so stellar, but I'm not really doing anything to turn it around.

My car payments are consistent - but that's all I've got going for me.

Until now.

I signed up for a credit card this week. It's a secured card (I had to put 200 bucks towards it to ensure they had some money from me) through the same bank that my auto loan is through.

My plan is to use this card frequently, but in small doses.

$50 bucks a month in charges - $50 bucks a month in payments.

Hopefully my consistent payments will improve my credit score, and thereby improving my credit limit.

So maybe next time I need two grand to fix my car - I'll have another option.


Me! said...

That's exactly how I got into debt originally too. They always go after poor college kids.

What you are doing is what you need to do. Just pay it off each month and you'll be surprised how much your credit scores will improve. Financial counselors will say that the worst thing you can do when you have bad credit is to have an cash only philosophy. Because you're right, you're not building it back up again.

A little over two years ago I had had enough and filed for bankruptcy. It was the most humiliating moment of my life. But look at me today. I've now got my FICO scores in the "Good" category and I'm now sitting in my first home.

You can do it Kate. Just be smart and buckle down. :-)

spydrz said...

Those college credit cards were the t-shirt if you get a card!!

Well, let's just say I know it's like...I haven't had a card in a while, which has made renting cars an interesting proposition while out of town. But they're necessary evils...which is why I now have a corporate card.

Kate The Great said...

Yes, I was a total sucker getting in to credit cards in college.

Interestingly enough, the New York Times had an article this weekend talking about how bad it is to operate on a cash only basis.

Also - there are some blogs out there where people "confess" their awful financial situations (mine isn't that bad - aside from my car I don't really have that much debt).

I guess 30 is a perfect age for financial rebirth...