My $350 Credit Card Mistake & Lesson

I used to be a debit-card-only kind of person throughout college. I just hated the idea of being in debt for the whole month until I paid off the balance. Another more important reason is that I forgot about my first purchase with the credit card. Bank of America (BoA) sent me a bunch of notifications which I didn’t bother to open because I thought it was just marketing mail.

Then one day I opened the email and saw a $275 overcharge fee on top of the $120 balance ($395 in total). I freaked out. Being a poor grad student, that was a lot of money for me. After failing to convince the female banker to waive or reduce the late fee, I grudgingly paid the amount thinking it was over. Or so I thought.

A couple of months later, I opened another mail from ¬†BOA. Lo and behold, I got charged $75 in late fees for an original $5 late fee of the original $120 balance. “What? How did this happen?” Turns out, there as an incoming $5 late fee for the last $120 balance waiting to be added to my account. The banker didn’t even bother to tell me that.

After another call of explaining and convincing, I grudgingly paid the $75 late fee. Again.

That was a painful experience for someone who was hesitant to spend even $1 on candy or soda like me. $350 in late fee. It was almost twice my monthly grocery bill. It took me a really long time to forgive myself (and BoA). I swore to myself I’d never use credit cards again in my life. I hated that credit card and what I had to pay to use it only once!

The story changed one day when my then boyfriend started asking me what he should do with the $100 rewards he just got from Bank of America. The frugal side in me suddenly became alert: “What? $100 free money from the bank? How did you get that?”

He explained to me that I could get cash rewards from the bank if I used the credit card for purchases. All I needed to do was to remember to pay off the balance at the end of the month.

I asked if there was an automatic payment option since I didn’t want to forget again. He said no. “Well, then I’m not going to use it and make the same mistake as before,” I said. My then boyfriend decided to use the cash rewards for groceries, which I was pleased to hear.

He brought up that topic a couple of times, convincing me that it’d be good to build my credit history for a future mortgage or car loan. I wasn’t particularly interested in those things, but the cash reward did.

One day I decided to give the credit card another chance to redeem itself. If I ever had to pay the late fee again, that’d be it.

Fast forward four years later. I’ve been using the credit card responsibly to build up my credit score and have gotten hundreds of cash rewards from BoA. I guess it made up for the $350 late fees I paid four years ago. And more importantly, the credit history helped me to take out a mortgage for the FAFs’ first house.

Now I check my account balance every day and pay off my credit card payment days before it’s due. And I’m happy to report that I have never paid any interest rate or late fees on my credit card ever since!