Credit Cards: Don’t Make The Mistakes These People Did
September 11th, 2008 No Comments » | POSTED BY ROB
Earlier today I was reading a shocking post on 15 horrible examples of credit card debt.
Debt is of course relative, but in anybody’s world, managing to owe $750,000 on credit cards is simply unbelievable. Imagine trying to snowball that debt.
Some of these stories reminded me of a friend I once had who reckoned he had more than £20,000 worth of credit card debts, and was paying out most of his monthly pay packet just to keep up with the interest – heaven knows how long it would have taken him to pay it back if he’d had paid just the minimum amount.
At the time, he didn’t seem too concerned about the debt – it had been built up whilst at university, and he had some nice gadgets and a decent car to show for it. He was hardly cutting back on his spending. Luckily for him, he worked pretty hard at exams and ended up get quite a high-paying job (yep, in financial services), which meant he could start eating away at the balance. I haven’t seen the friend for quite a while, but with the money he was earning he should have been able to repay the debt and live a pretty decent life since I last saw him. Whether he did or not I’ll probably never know.
How Poor Planning Led To The Loss Of A 0% Interest Rate
I was also talking about credit cards with a friend earlier, and they confessed to a mistake they’d made with their credit card recently. The had a 0% balance transfer card with a reasonable amount left on it, but because they had been on holiday, they had forgotten to make a payment. Paying the minimum amount late, they not only incurred a £12 charge, but more worryingly by making a late payment they lost the 0% rate on their balance – if they leave the money on that card, the late payment could end up costing them a lot in added interest.
Luckily there are still a few decent 0% balance transfer deals available at the moment, so hopefully they’ll be able to shift the debt onto one of those. I think the key learning from this story is to keep track of when you need to make payments – setting up a Direct Debit for at least the minimum payment amount is a good idea (indeed, some credit card providers will oblige you to have a Direct Debit setup even if you have no balance or do not spend on your card).
Do you have any credit card horror stories to tell? If so, share them with us in the comments below.
photo credit: epidemy
