Messed Up With Credit Card: Is this a BIG deal?

TheMadHatter93 · December 2014

I am kind of in panic mode after getting my first bill from an in-store credit card… I misread their purchase policy and did not realize to get the purchase interest free over 12 months that you had to be in the store to request those terms at time of purchase.

So now I have a bill for $961.96 that has been collecting interest (29.9%) since November 6th.

I went and took a chunk out of my savings account to bring the balance down to $670 so that my credit score doesn’t get dinged too badly by using a large portion of the credit (only $1200 limit) and to save on interest. At this point I can really only afford to pay $43 biweekly and if my calculations are correct it will be paid off in 10 months and I’ll be out $95 in interest.

My issue is that I don’t know how “big of deal” this is for my credit score. I have worked so hard to keep my 2 other credit cards in good standing by paying their balance in full every month and now a rushed purchase screwed that up. I am hoping to be applying for student loans next year to go back to school but if this messes with my high credit score I could probably kiss that goodbye.

I don’t even know how to break this to my husband… the only reason we made the purchase was because I assured him that we’d only pay $85 monthly and not a penny in interest. He trusted that I had fully researched the terms and wasn’t making obligations we couldn’t meet.

There were already enough things after the purchase to make my husband doubt purchasing – I had to pay out hundreds in medical costs when my insurance denied my dental claims and there were a couple of other surprise expenses that we couldn't avoid – our savings account is not looking good at all.

I have certainly learned my lesson about not reading all of the fine print but I am very worried about how this may impact the future.

brij2006 · December 2014

I would definitely start with calling the 800 number and asking to be placed on the 0% promotion.

If that does not work, then I would go in store and ask to speak with a manager to get set up for the 0% promotion.

hoffse · December 2014

OK, first of all - calm down.

Second - come clean to your husband. It was an honest mistake.

Third - the lesson here is not only that you need to read T&Cs very carefully, but that you also need to never charge something to a credit card that you can't pay off immediately. Those of us who use credit cards on a regular basis (raises hand) usually do so for points - not as a way of financing things. A few folks on this board have successfully financed purchases with no interest cards, but it's something that's not typically recommended unless you are 1000% sure of what the terms are. Also - the ones I am thinking of who have used interest-free cards usually do it for very VERY large purchases.... like home remodel level purchases. Frankly, $1,000 just isn't enough to finance unless it's an emergency. Now you know for the future.

Fourth - are the loans you are seeking federal or private? If they are federal, the government seems willing to hand out loans to just about anyone. If they are private, then your credit will be of greater concern.

As for your credit, as long as you are making minimum payments it shouldn't be too big of a hit. Opening the card in the first place may have actually been the bigger hit. Pay this card off as quickly as possible and take it as a lesson learned.

Sisugal · December 2014

What is done is done - time to move on.
I would cut back on Christmas spending, and cut back or eliminate all non essential spending (eating out, new clothes etc). Add that to your cc payment.
Do you anticipate a tax refund? If so - file asap when you have all needed docouments - then add that to your cc payment.

TheMadHatter93 · December 2014

brij2006 said:

I would definitely start with calling the 800 number and asking to be placed on the 0% promotion.

If that does not work, then I would go in store and ask to speak with a manager to get set up for the 0% promotion.

I tried that, the 1-800 told me that the only possibility was to return it in store and then repurchase it on the payment plan. The store told me that they refuse to do that as it is my fault for not understanding the 0% financing and if I returned it I would need to repay at full price, not the discounted price I got.

hoffse said:

OK, first of all - calm down.

Second - come clean to your husband. It was an honest mistake.

Third - the lesson here is not only that you need to read T&Cs very carefully, but that you also need to never charge something to a credit card that you can't pay off immediately. Those of us who use credit cards on a regular basis (raises hand) usually do so for points - not as a way of financing things. A few folks on this board have successfully financed purchases with no interest cards, but it's something that's not typically recommended unless you are 1000% sure of what the terms are. Also - the ones I am thinking of who have used interest-free cards usually do it for very VERY large purchases.... like home remodel level purchases. Frankly, $1,000 just isn't enough to finance unless it's an emergency. Now you know for the future.

Fourth - are the loans you are seeking federal or private? If they are federal, the government seems willing to hand out loans to just about anyone. If they are private, then your credit will be of greater concern.

As for your credit, as long as you are making minimum payments it shouldn't be too big of a hit. Opening the card in the first place may have actually been the bigger hit. Pay this card off as quickly as possible and take it as a lesson learned.

My other 2 credit cards are points cards, all of my purchases go through those cards and are easy to pay off when the statement is ready. One of the cards even has financing on it for the mattress that we needed when we moved in. I made some credit card mistakes during college that I was able to clean up so I have an understanding of only charging what you can afford. At the time of purchase our savings account would've been enough to pay with cash and still have savings left over - but it was only after that we had our surprises that drained it.

My loans are unfortunately private because federal loans require me to quit my job or they won't give me a dime.

Sisugal said:

What is done is done - time to move on.
I would cut back on Christmas spending, and cut back or eliminate all non essential spending (eating out, new clothes etc). Add that to your cc payment.
Do you anticipate a tax refund? If so - file asap when you have all needed docouments - then add that to your cc payment.

Sadly my Christmas spending is finished and this year was a significant cut back in terms of gift spending in terms of other year. The budget is being picked apart this month to look for money to pay this thing off. I had already planned on putting my tax refund towards the credit card (which should hopefully eliminate it by May).

brij2006 · December 2014

Sorry, but I would return the item period and not re-purchase it. Then take the $85/month you were going to put toward the bill and save up to buy it in cash. Then you won't have to worry about interest at all or dealing with their shady small print.

Xstatic3333 · December 2014

I'm with PPs; credit-wise, this is not a big deal. When I was in bad CC debt, I was using close to 80% of my limit on one card and still had a credit score in the mid-700s.

In terms of dealing with the purchase, I would either buckle down to pay it off like you are currently planning or return it like @brij2006 suggested. I would definitely forgive yourself, fill in your H, and learn from the experience (which it sounds like you have). I'm not a fan of 0% interest financing myself because it tripped H up quite a bit when we were dating and really set him back financially. A lot of them are very sneaky. I do use cards for points, and run big purchases through them, but 0% offers just aren't for me.

Though it's not why you are here, I do want to caution you to please think twice before taking out any private student loans. Many of them have horrible terms, are extremely unforgiving, and can really hurt your finances. Are you sure you won't qualify for any federal loans? I just came through a grad school program that most of us had to take out some loans for. I qualified making 20-30K a year in part time work, and some of my classmates were making 40-50K at "real jobs" while in the program and were still able to take out federal unsubsidized or PLUS loans. I'm pretty sure anyone going at least half time can get PLUS loans (which aren't great either, but are better). Just something to think about; I have a lot of friends who took out private loans and freely say that it wasn't worth it.

KatieCutie05 · December 2014

Your credit score is calculated based on the sum of all your debt on the cards and the sum of all the credit limits, so if u have one card that's paid off then having another close to the limit won't matter. Also keep in mind that even those cards that u pay off every month, still count toward your credit limit regardless how much your payment is. So you are probably above the 33% utilization even without this purchase.

If you really only have 60 left in your budget to pay on this card, you can't afford it even if it was interest only. I had to return a laptop once because I couldn't afford 40 dollars a month.... That was a wake up call. I'm so glad I returned it, my husband was right I really didn't need it. Please don't fall in the 0% trap again. Its not worth it even when it does work. Just pay cash next time.

formerlyGDaisy09 · December 2014

I have nothing against credit cards when they're used for purchases that fit in your budget. Now I mostly work credit cards for points, though I have in the past used 0% offers to manage a largre purchase that was a need. H an I purchased a matress the day we closed on our house on a 0% interest for 18 months offer (we comfortably paid it off in 12). the only reason we did it that way was because we wanted an extra cash buffer the first year we were in the house (good thing since we purchased a fridge 2 months later...paid cash for the fridge).

We lucked out with that offer, but I have heard horror stories from friends about terms in 0% offers, I'd only take advantage of one as a last resort now.

If the $95 in interest you'll end-up paying is too much to swallow I would return the item and wait to buy it until you have the money saved up. It's not going to affect your credit score that much at this point...like other posters said opening the card in the first place was the biggest ding to your credit. if you do nothing else, you need to come clean to your husband.

TheMadHatter93 · December 2014

So I did of course come clean to my husband about all of this, he thinks it is a good idea to proceed with paying $45 biweekly until we have the means to pay it off in full. The interest is unfortunate but it isn't too much considering the situation - if I had not been able to pay a lump sum we would've been paying a lot more and it would've taken months longer to pay off as a result.

I don't think I am ever again going to make a purchase like this without taking my time and being more careful. If I had just waited a week I would've known of the unforeseen expenses that drained most of our savings (which would've meant I couldn't afford to make the purchase) plus I likely would've looked into the card a bit more.

Messed Up With Credit Card: Is this a BIG deal?

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