What I Learned From My $350 Credit Card Mistake

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I used to be a debit-card-only kind of person until I was 25. I just hated the idea of being in debt for the whole month until I paid off the balance.

Another reason for my resistance to credit cards was the $350 in late fees I had to pay Bank of America in 2010.

The mistake

At the age of 23, I somehow forgot about my first payment with the credit card – a co-pay for a doctor visit.

I had left my debit card at home and only had the credit card in my wallet when I was at the hospital.

I was so used to just using my debit card it didn’t occur to me that I got in debt the moment I swiped the credit card and would have to pay it back to the bank.

Bank of America (BoA) later on sent me a series of notification letters which I didn’t bother to open because I thought it was just marketing mail.

Then one day I opened one of the letters out of boredom and saw a $275 overcharge fee on top of the $120 balance ($395 in total).

I freaked out. For a poor grad student like me, that was a lot of money. After failing to convince the 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 a $5 late fee of the original $120 balance.

“How did this happen?”, I frantically asked myself. It turned out that there was 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 fees was almost twice my monthly grocery bill. It took me a really long time to forgive myself (and BoA) for that mistake.

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 change

Everything changed one day when my then boyfriend (now husband – Mr. FAF) started asking me what he should do with the $100 rewards he just got from using his credit card. 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  if I used credit cards for everyday purchases. All I needed to do was remember to pay off the balance at the end of the month.

I asked Mr. FAF if there was an automatic payment option since I didn’t want to pay late fees again. He said no. “Well, then I’m not going to use it and make the same mistake as before,” I said. Mr. FAF decided to use the $100 cash rewards for groceries, which I was pleased to hear.

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

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

The update

Fast forward four years later, I’ve been using the credit card responsibly to build up my credit score and have gotten hundreds of dollars in cash rewards from BoA. I guess it makes up for the $350 late fees I paid four years ago. And more importantly, the credit history helped me be able to take out a mortgage for our first home in 2016.

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

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