Lessons Learned From My First Retail Credit Card

Guest Post By: Bog Of Debt - A 27 year old tackling debt head on and sharing her journey.

When I was able to open my first credit card, I was on top of the moon. The card was entirely for “building credit” or so I told myself.  I eventually slipped farther away from the goal of building credit and closer to buying things with money I didn’t have. Then came this offer while I was shopping at JC Penny.

The conversation went similar to this…….

Store Clerk:  Do you have our store retail credit card?

Me: No?

Store Clerk: Well would you like to sign up for our retail credit card?

Me: Well that depends….hmmm

Store Clerk: We offer 20% off your first purchase if you’re approved plus there are many deals only valid for our card holders.

What is a retail credit card? A retail credit card is a card offered by a specific store or department store and they offer you special deals and discounts for using their credit card!

Instantly dollar signs started going off in my eyes! I had the cash money for the clothes I was purchasing and my bank credit card was almost maxed out so I couldn’t use that.  Then here this lovely sales clerk offering me a chance to SAVE money and purchase the clothes without using the money I had to pay for this purchase.  Instead, I could buy something else with that money. How awesome was that! Of course I had to be approved first with a credit check, so I attempted it and was approved instantly.

Nifty, this might be the best first credit card for retail! I saved 20% off my first purchase later learning that I would get that 20% off all purchases that day then left to go to the book-store. I used the cash money I had for my clothes to buy books and thought about that extra bit of money I could save. So back to JC Penny’s I went and I shopped. I ended up spending about half the limit on the credit card that day. (It was a $250 credit limit)

From that point forward it just got worse. Every time I would get the credit card bill for the minimum amount due of $15 I’d send in $30. I would justify the debt by saying that I was at least doubling my minimum payment and that would help me reduce credit card debt. Then, off again I would go to the mall spending more money on that retail credit card.

Eventually, the credit limit on my retail credit card was increased to $1500. I also found out I could use the credit card at a local drugstore when I didn’t have money in my bank account and “needed” something. The word “needed” translated into purchases such as a various pictures and frames. Let’s not forget when they were having a going out of business sale and I needed $200 worth of “stuff”. All this shopping did was put me back at square one, back in debt. I needed to find a way to get out of credit card debt, fast!

Sometimes I would put the credit card down and pay off a chunk of the bill over a period of a few months. Then before you know it, I’d slip right back into that same cycle of buying then making a minimum payment (of which I was no longer doubling but maybe adding $5-$10 extra) and purchasing more stuff. I racked up enough debt on the credit card and when I lost my job it was the first credit card I stopped paying. Certainly not something I would recommend nor the smartest idea I had at the time, but I learned from that lesson.

I look back at my first store credit card and use it as a learning experience in my life. I spent much more than I could afford and it’s costing me to this day to get off the debt train and back to common ground. If I could do it all over again I would walk away from the credit card spending sprees and pay the credit card in full each month. My debt is making me a stronger person through this journey out of the debt hole and I hope I can inspire others along the way.

I now understand how to budget and I wouldn’t make the mistake again of spending more than I earned or could afford. Looking back I didn’t own those clothes or pictures, the credit card company did, something people fail to see. I was buying it from JC Penny at an increased cost to myself simply by paying the minimum payments. Now when I purchase a picture frame or an outfit, I love knowing that it’s mine because I bought it with money I earned and not wished I had by using the retail credit card.

What Credit card mistakes did you make and learn from?

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Mr. CBB
I’m from the UK and now a recent permanent resident in Canada. I bought my first house at the age of 21 after University then my second at the age of 24. I’ve always been fascinated with personal finance, savings, learning to make money and watch it grow while combating debts along the way. Canadian Budget Binder is a place where I get to share my experiences with personal finance and learn about yours along the way. I hope you stick around and check me out on Twitter, Facebook and Pinterest where I am active on all social media sites. Cheers, Mr.CBB
Mr. CBB
Mr. CBB

Comments

  1. Thanks again Mr. CBB for giving me the chance to guest post for you!

  2. Wendy LeDrew says:

    I’m sure many of us can relate to this. I know I can. But it is all lessons learned thats for sure!! Thanks for sharing.

    • Thanks for coming by Wendy…. always enjoy your comments. There are pros and cons to credit cards but sometimes we learn lessons the hard way. I’m betting we may think twice before doing it again like bog of debt. She is well on her way… can we say, happy!!! Cheers Wendy. Mr.CBB

    • Oh and I definitely learned my lesson. IF I get a credit card again, I will only spend within my means and treat it like a debit card–it get’s paid off in full right away. But I’m not anywhere near to the point yet. Cash only for now!

  3. Mary F Campbell says:

    Thanks for sharing your story with us!

    It’s a difficult realization to know that you are out of control but you have started on the road to recovery…stick to your guns! It’s hard at times to funnel the money you’d dearly love to have available to spend into your debt repayment, I know.

    But, it will be so very worth it when you can announce to yourself & shout it from the rooftop that your are debt free!!

    • I am so waiting for that day! It helps that I’ve been to my bottom point (different from other’s I know) and don’t want to go back there. I keep that in my mind when I start to get disgruntled about the debt repayment.

  4. I have been in trouble with all sorts of credit cards before. I have had Zellers and Sears cards that I ran up until I consolidated them into my mortgage. You just always think “I’ll pay it off next month”…Cards with rewards are also addictive. You always think to yourself “I’ll buy it and pay it off right away and I’ll just get the points for it. I got into trouble with a Petro Points MC and a PC MC with this mentality. Now I have a PC bank account and put money in it every few weeks for groceries and just use that to earn points. I don’t earn them as quickly because I can’t use it for purchases anywhere but I still earn something and I won’t get into trouble this way :-) Now I just have one VISA through my bank, I do earn points on it but I never keep a balance. It is very easy to get into trouble with all of these kinds of cards…when you max them out the bank doesn’t cut you off, they increase your limit and let you get into more and more trouble! If you aren’t on a budget or disciplined with your money, credit cards really are nothing but trouble!

    • That was the horrible thing-my limit would be right there and instead of letting me learn my lesson, the bank just kept raising it. I’m sure that if it would have stayed at the $250 for any amount of time, I’d have learned to pay it off or I can’t use it. Instead, they just kept upping it, hoping I would spend more. And I did.

  5. Joanna Cheevers says:

    This would be a great post for students just entering university or college. There are always people around during frosh week trying to get students to sign up for credit cards. I know I got my first card when I was going to school. I`ve always been pretty good with my money, so I`ve fortunately never had this type of problem. I can however see how easy it is for someone to get into debt this way, particularly the way you describe it, and particularly for a student that can often find themselves short on funds. Thanks for sharing.

    • And that was the horrible part-I was just entereing my sophmore year when I finally recieved that card. I had gotten the credit card a month earlier and then had the store retail card. It was just a never ending cycle-no money for the pizza? No problem, I’ll put it on my card! Ugh, the wasted money is the worse.

  6. I think we have all walked this path sometime in our lives. In today’s society it is so hard, especially for young people, to live withing their means. We are constantly bombarded with advertisements for great sales and new credit. Budgeting is what businesses do each year, we need to do the same.

  7. Canadian Performer's Money says:

    I was in Walmart the other day and the woman almost wouldn’t let me leave without signing up for a credit card. She kept badgering me at the checkout. I found it very off putting.

    • That’s when I just smile and walk away. I don’t care to be honest.

    • I’ve gotten very good at being able to say no thank you but I agree-when a cashier keeps hounding you, I don’t even want to go back to that store anymore.

      • Canadian Performer's Money says:

        That’s the way I felt! I explained to the cashier that the more credit cards you have, the lower your credit score. She just kept repeating “save 20 bucks, save 20 bucks…”. I guess they get a commission on every person that signs up.

  8. thank you for this story! I can completely relate to this story – I was really good at first with my first credit card, paying off my debt monthly, etc…but soon I found myself without a job, school fees due, pregnant and stressed out! I would use my credit card for the stupidest things (clothes I didnt need but made me feel better, make up, stuff for around the house, etc..) I would pay off a bit, sometimes even a big chunk but then would just rack up the debt again. Was a cycle that went on for about three years until I realized it did not help me emotionally and was only making my stress worse! Proud to say I have managed to pay off the majority (about 80%!!) of my debt in the last three years (including school debt, dumb credit card debt, etc..). My word of caution for other credit card users – if you dont have the money in the bank for it or are not willing to use the money you have for the item then dont buy it! You dont need it!! Make plans and budget for items (I use a yeary sheet for the stuff I will need/want (clothes, shoes, home items, etc..) Thanks for the great post!

    • Amazing how it takes going into debt sometimes to realize what you say as your word of caution. Why is the obvious not so obvious sometimes. Good for you, I’m glad you are on the path to debt freedom and you have learned from your past mistakes. Keep at it.. and the world will be at your fingertips my dear. Mr.CBB

    • I know exactly what you mean about if you don’t want to use the money you have for clothes, don’t buy it with credit. I’ve built up lists of “wants and needs” and time tables and am slowly saving up for them and marking them off. Much better than using credit/money I don’t have to buy them!

  9. joanne tjerno says:

    Great post. I received my first credit card on my first day of university. There were tables of banks basically haggling and trying to get all the students to get credit cards. I figured sure I had saved up for my first year of university a 500 dollar credit card wouldn’t be that hard to pay off. Well a few months later they raised my limit to 2000 due to my raise at work and paying my bills off on time. Then one credit card led to another credit card which eventually led to a car loan then a personal loan. It became almost addicting to have credit and see how much one would be given. I was so great with money before and worked so hard. I had saved and saved to pay my way through university and then in my final year had to claim bankruptcy at 22 because i had just accumulated so much credit. My official date for claiming bankruptcy was the day my daughter was born. Terrible feeling. Wish i had been more careful with credit and wish more was explained to me when I received my first credit card. Sometimes you just dont realize how bad it is getting until it is way too late. I have now learned not to jump in head first and get too far in with money. One credit card for building credit is enough.

    • I hear you entriely It’s very easy to fall into the credit trap. Sometimes I would just sign up for a new credit card just to see if they would give me one and what the limit on that card would be. But I hope that in telling my story, others see what mistakes I have already made and learn from them without having to make them theirselves.

  10. For most of us, credit cards tend to turn “wants” into “needs.” You’ve got the leeway to buy without actually shelling out anything – at least, for the moment – so it tends to get a lot easier to give in to impulse buys. Same goes for the retail credit card.
    Good budgeting is all about spending less than you make so you’re comfortable managing your current and ideally necessary expenses. Yes, you can use credit cards to help you build your budget, but that’s only if you’re financially literate and responsible (read: willing and able to make sound financial decisions for the betterment of your fiscal health). The best thing to do is get rid of all but a couple of credit cards to reduce the temptation to buy, buy, buy, and keep those you have solely for emergency purposes. You’ll save up on fees and interest, too.

    Here’s something that may help if you’re neck-deep in credit debt:

    http://www.solvingdebt.ca/blog/debt-help-%E2%80%93-what-solution-best-your-credit

    Good luck, and curb that spending!

  11. For most of us, credit cards tend to turn “wants” into “needs.” You’ve got the leeway to buy without actually shelling out anything – at least, for the moment – so it tends to get a lot easier to give in to impulse buys. Same goes for the retail credit card.

    Good budgeting is all about spending less than you make so you’re comfortable managing your current and ideally necessary expenses. Yes, you can use credit cards to help you build your budget, but that’s only if you’re financially literate and responsible (read: willing and able to make sound financial decisions for the betterment of your fiscal health). The best thing to do is get rid of all but a couple of credit cards to reduce the temptation to buy, buy, buy, and keep those you have solely for emergency purposes. You’ll save up on fees and interest, too.

    Here’s something that may help if you’re neck-deep in credit debt:

    http://www.solvingdebt.ca/blog/debt-help-%E2%80%93-what-solution-best-your-credit

    Good luck, and curb that spending!

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