10/15/2013 06:05 pm ET | Updated Oct 30, 2013

My Credit Card Gave Me False Security


By Zhanna Raymond

This is a teen-written article from our friends at Represent Magazine, a platform for and by young people in foster care. Represent is published by Youth Communication, a nonprofit organization that helps marginalized youth develop their full potential through reading and writing. Some names have been changed in this young author's story.

I got a credit card when I was 19 because I thought it would make me feel better about myself. All the adults I knew had credit cards. Most of my coworkers at Berkeley College used theirs as their main form of payment; one got approved for a card with a $10,000 limit. And that made these people seem as if they were freer, with more possibilities. Before getting a credit card, what I could buy was limited to the amount of cash in my pocket.

I was turned down for a credit card by a couple of banks because I had no credit at all—I had never taken out a loan or bought anything on layaway. Banks want evidence that you can pay back money on time. But I was finally approved for a card from Citibank with a credit limit of $1,800 and no interest for the first nine months. This meant that even if I didn’t pay the full amount at the end of each month, I wouldn’t pay interest—for nine months.

The card also had a point system with rewards like gift cards, laptops, and cash. The more I spent with my card, the more points I’d accumulate for a reward. Shopping at certain pricier stores would get me double points. Reading the fine print is important. Some credit cards charge annual fees just for the privilege of getting points.

I went a little crazy. I bought things that I otherwise would have saved up for. I charged a couple of trips to the Caribbean—and the souvenirs too. I purchased clothes and went to expensive restaurants and used the excuse that I’d be able to make partial payments. Having clothes and gadgets that were out of my reach before made me feel richer and more powerful. Whatever I wanted I could have.

A Second Card

About a year after I got my Citibank credit card, I was shopping at JCPenney one day. I didn’t shop there often, but whenever I did, the cashier would always mention that I’d get 20% off my entire purchase if I signed up for a card. I was buying a lot that day and applied only because I wanted that discount. In about four months I used it enough to earn a platinum card, which meant that I’d spent over $1,000. It also meant I earned more coupons—which enticed me to shop there even more.

When I got the JCPenney card, I had just started accruing interest on my Citibank card, and the JCPenney card charged interest right away. The excitement of owning a credit card faded after the interest charges kicked in. They faded even more when I needed to juggle two payments. I had understood before that this was borrowed money, but without the interest there was no penalty for using my credit card.

But now there were penalties. On top of the interest itself are extra fees, and if you skip a payment, the interest rate goes up, so you owe even more. I remembered the idea had been to build credit, not build debt. At this point I owed about $1,000 on my Citibank card, and could pay back about $300 monthly. Even though I paid it back, I was still using my card and being charged $25-$35 in interest each month. I also had to make payments on my JCPenney card, although I didn’t use it as often.

I realized I wanted to be smarter about spending and not go into debt because of material things. Now, my immediate goal is to finish paying down both credit card balances. I’m almost there. Once I clear that debt away, I’d like to save at least $100 each month.

Now I check how much money I actually have in my bank account before I shop. If I’m looking for something specific, I go to the mall with the idea that I’m spending $25 on a blazer, and a blazer only. If I can’t pay for an item with the cash I have on hand, I think twice about whether or not I really need it.

Shopping online also helped me to curb my spending. I have more control online. I can just look at specific things that are in my size and my price range, and not get carried away with something beautiful in a store. Also, the wait for shipping holds a bit of suspense and excitement.

Click here to read the rest of the story on RepresentMag.org.


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