Diving Deeper Into My Debts – Part 2: Credit Cards

Day 4| Paid: $0 | Remaining Debt: $63,117.27

Today I want to talk about my credit cards. I currently have 4. Let’s look at each of them

Credit Card 1: This is a secured credit card with my bank. A few years ago I closed all my credit cards. That was actually one of the conditions of the bank I was working with to secure a FHA mortgage for my old house (that is a story for another day). So a few years ago before my major personally financial crash (again a story for another time) I decided I needed/wanted a small credit card, but my credit score was in the dump, but I got an offer from my bank for a secured credit card – put down $50 cash and get a credit card with a $500 limit. So I went for it. And for two years I used it responsibly, but this past year I let my old habits creep back in and maxed it out. The current balance currently stands at $501.91, so $1.91 over my limit. It has an interest rate of 24.74 and a minimum monthly payment of $25. If I never put another dollar on the card, and only pay the minimum each month, it will be paid off in January of 2024 and I will end up paying about $118 in interest.

Credit Card 2: Chronologically this is actually the 3rd credit card, but like the 1st card it is with my bank, so it is easier for me to think of them as #1 and #2. This is actually a cash back rewards card with a limit of $300. I got this about 18 months ago, and for the first 6 months I did all my spending on this card, paid it off weekly, and earned some nice cash back. Then I slipped into my old habits and maxed it out. Right now my balance is at $295.70 with a 26.99% interest rate and a minimum payment of $25. Assuming I don’t add another dollar to this card and only pay the minimum it will be paid off in April 2023 and I will pay about $58 in interest.

Credit Card 3: This is a Synchrony Car Care credit card. A few years ago my old car was broken down and beat up. It was in horrendous shape and it needed work badly…except I had no money. The estimated repair was around $800, so I applied for a Car Care credit card to see if I could at least finance some of the repairs. I ended up with this card for $500. However my father was gracious enough to save me and helped me put a down payment on a new to me used car. I traded in my old car as part of that deal and never went through with the repairs. I will talk more about my current car and the details about that later, today I just want to focus on the credit cards. So for a long time this card sat unsed. The card itself could only be used at auto repair shops and gas stations, so I kept it in the center console in my car in case I ever needed it in an emergency. Then one day when I was short on cash I used it for gas…and kept on doing that for a few weeks until I maxed it out…. The card has a $500 limit, and currently my balance is $380.79 with a 29.99% interest rate and a minimum monthly payment of $29. If I make the minimum payments only it will be paid off May 2023 with about $87 going towards interest.

Credit Card 4: This is a Synchrony Care Credit card which can be used for medical, dental, veterinary, prescription, and health supplies. I have excellent health insurance but no HAS and my current savings is basically zero, so at the time that I got this card it seemed like a good idea to be able to cover any unexpected copays, or if my cat needs veterinary care, or anything like that. I do not plan to use this unless absolutely necessary. In fact they threated to close the account since I hadn’t used it yet, so a few weeks ago I purchased some health supplies using this card and paid off the balance the next day. I needed the supplies anyway so that wasn’t a big deal. Right now the balance is $0 and I hope to keep it that way.

My credit card situation is not ideal. I wish all the balances were $0. I am sure you can see a pattern: I get a card, use it responsibly for about 6 months, and then go buckwild and max it out. Fortunately all of the credit limits are $500 or less, otherwise this could be a much bigger issue.

The credit cards are high on my priority list, but they are a much smaller issue than the high interest loans, and even if I pay only the minimums the total I end up paying in interest is relatively small. Fortunately I think with the debt paydown plan I am putting together I will be able to pay these off quicker, but for now the minimum payments will have to suffice.

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