My Credit Card Choice

My group met and we chose a Bank of America credit card as the best card. There are multiple reasons for this decision. There was a zero dollar liability for any situations when the card would be stolen and purchases are made with it. This is a very good security to have.
There are some specific benefits to having this cards as well. There is no annual fee that is included with this credit card. There is a zero percent interest rate for the first year. All the other cards we looked at had this for only the first six months. After the first year, the interest rate can vary from 12.9% to 20.9%. The interest rate didn't matter to us very much because we will be paying all of our bills on time. This means we won't have any finance charges.
Another added bonus is the rewards program. I can earn 1.25 points for every dollar I spend on retail purchases. Can never have enough clothes! This beats the one point per dollar from other cards. I can eventually redeem these points for cash, travel, car rentals, merchandise, gift certificates, and more! There's nothing better than getting paid back for spending money on things I need!

What I've Learned About Credit

I had the weirdest dream last night! Credit credit credit. That’s all I could think about. I had a dream of going to college. It was an exciting experience! However, credit card companies bombarded the campus and were begging us to take a credit card. I finally caved in after the fifth booth and took one with a credit line of $2,000.  One week and $2,000 later, I was in debt. I had no idea what to do. But I knew I wouldn’t be in too bad of shape because the company offered no annual fee. Even the APR was a low five percent for the first six months! The finance charges wouldn’t be bad at all. This wouldn’t be a problem for me.

I continued to go through my first college year by only paying the minimum payment due on my credit card every month because that’s all I could afford at the time. All I had was a part-time job that I worked at about ten hours a week making minimum wage. I didn’t even have an opportunity to get a cash advance. As time went on I had to pay more and more each month, even though my balance should have been going down. It turns out, in the introductory period, I had a low introductory rate that later increased after the first six months, before I paid off my debt.  My new interest rate was now up to eighteen percent! There was nothing I could do at that point but keep paying it off little by little.

I didn’t want to call my parents and ask them for money so I could repay my debt because I knew that they would be disappointed in me for spending so much money foolishly. There was only one thing I could do at this point: call the credit card company. So I did. I asked them why my APR was so high after my first six months was over. They just responded that I signed the paper saying that the rate would be up and that they could control what the rate is and if they want to change it at any time. I was worried that they could change the rate to be even higher! The lady assured me that it wouldn’t increase because it is now a fixed rate. She also said that since I paid my last bill one day late, that I will also need to pay a $100 late fee next month. There is no way I can afford this!

I was stuck in a sticky situation. I need to find some quick money to pay off my debt before the interest will make my payment double. I didn’t know what to do because the credit card company took zero liability for my debt, even though I felt as if they lied to me. I had to keep going through college day by day, walking by the numerous credit card stands set up on campus. Then I had an idea! I could do a balance transfer to another credit card so I wouldn’t have such a high APR. I found the company with the lowest rate and immediately applied for a credit card. They accepted and I quickly charged my current debt from the first card, to the second. All my problems were over. All I had to do was pay off a smaller amount of money with a smaller interest rate and I was out!

Paying off all the money on the second credit card was harder than I thought. Even though it was less at first, the rate went up just like the other card. Thankfully I only had to pay the high twenty percent APR for two months before I was out of debt. But it took almost three years. This was the worst mistake ever. I didn’t realize I could get myself into so much trouble. I got so distracted by all the reward programs and incentives that I thought it was a good idea. I have so much stress in my life because now that I am almost done with college, I need to start paying student loans. If I didn’t spend all my money repaying a credit card company then I would have more money to do that. I was back in the same situation again, except worse! How am I going to do this? Where will the money come from? How will I get a good enough job? There’s a project due tomorrow? One more semester of classes? I can’t afford that. How will I…. ouch! Slap in the face. What was that for? I’m the victim here! Oh. I hit my head on the floor. I just fell out of bed. It was just a dream!

I hope that never actually happens to me!

Credit Card Worksheet - Sarah Brauza

Jenny was an irresponsible high school senior who took a credit card and charged up her credit limit of $2,500 within the first month. 
1. It will take Jenny approximately 15-20 years to reduce her balance by half. This is ridiculous because of the amount of interest that needs to be paid as well as the principal amount.
2. The last payment that Jenny will pay will be $10 because she paid such a small amount of money at a time to pay off her debt.
3. Jenny will end up paying a total of $9,983.63. Wow! That is almost four times the amount of money Jenny originally charged!
4. The amount of interest that Jenny pays will start becoming less than the principal she pays in the 45th year. That is a long time to start to be almost done paying off a small stupid debt!
5. Jenny will still owe $873.23 at her 25th high school reunion, which is probably much more money than everyone else she graduated with owes. She probably paid more than everyone else in credit card bills already too.
6. Jenny could have borrowed money from her parents to pay off the debt. She could have asked for a loan from a friend. Jenny could have paid off a little more at a time at each monthly payment. She could have worked another job on the side just to pay off her debt. Finally, Jenny could have had some of her paycheck deducted every month to reduce the payment amounts. If Jenny would've handled the situation differently, she wouldn't have as much debt and  would have a higher credit score and not have spent as much money.