Former Debtors Share Their Biggest Credit Card Mistakes

Eileen WolterEileen Wolter says she's come a long way from her free-spending 20s. Back then, says Wolter (right), a stay-at-home mom and blogger in New Jersey, "I basically lived my entire life off credit cards." Worse yet, she adds, "I just used the checks [the card companies sent me] as if they were from my checking account, never looking at the fine print about APRs."

Amber Stubbs, managing editor at, says cash advances are tops on her list of credit card no-nos. "Not only do you pay a fee, but you also start accruing interest from the moment you get the advance. There's no grace period," she warns. In addition, the interest rate you'll pay on a cash advance could be as high as 24%.Credit card mistakes are a fact of life for many of us, at least occasionally. That should come as no surprise, what with the card companies pulling out all sorts of tricks to help fatten their bottom lines. While the CARD Act helped alleviate some of the sneakiest practices, it's still easy for consumers to be fooled or not realize that their innocuous-seeming actions -- like using those handy checks the card companies send you in the mail --can have big financial consequences.

WalletPop spoke with several real Americans a lot like you who shared with us their biggest credit card mistakes so you can learn from them. We also talked to experts about why these mistakes can be so devastating when it comes to your credit card balance, your credit score and your hard-earned money.

Cash Advance Checks Are Not Free Money

Despite all the apparent freedom offered by what Wolter estimates was as many as 20 credit cards, she admits, "I was nervous about money all the time." Her financial situation came to a head when she and her now-husband planned to buy a house, and they couldn't get a mortgage because of her high debt and low credit score.

Even though Wolter was making her minimum payments, it's not surprising that her debt had a negative effect on her credit score. "People don't realize that if they max out their cards, that's going to hurt their score, even if you're making your payments on time," says Barry Paperno, consumer operations manager at

After Wolter saw a copy of her credit report, she says, "I realized I was almost $50,000 in debt, and I literally had nothing to show for it. It was a total wake-up call." The experience prompted her to start paying down her $27,000 in credit card debt (the remainder was student loans) and trade her cash-advance checks for coupons.

Don't Live Large on Plastic

For Arash Afshar, the wake-up call came roughly four months after commissions at his job as a nightclub event-booker dropped sharply when the economy started to slow. Afshar, who lives in California, admits he didn't immediately cut back on his habits of going out to swanky nightspots and taking his girlfriend to nice restaurants two or three times a week. "I really had no reference for the way I live now," he says. "I'd always lived comfortably, and I had to completely learn from scratch how to cut luxuries that I thought were necessities."

This is pretty common thinking, especially for young people who've never had to live through a serious recession before the current one, says Farnoosh Torabi, a money coach at "It's very tempting to stick your hand in the cookie jar," she says of people who rely on credit cards for day-to-day spending after suffering a loss of income. "You think next month you'll pay it all back, but what happens is, you get comfortable living a certain lifestyle that's backed by debt. That's something behaviorally we have trouble with."

For Afshar, who was finally forced to modify his behavior, cutting back meant eating at home, buying things like groceries on sale or at the dollar store, and forgoing pricey celebrations like friends' bachelor parties in Las Vegas. "The ideal lifestyle that you're supposed to be living is really you buying into other people's opinions," he says. "I think most people get into debt because they want to keep up with the Joneses." Afshar's reflection is a lesson some people take a lifetime to learn.

Just Say 'Close!'

For Scott Miller, a sales and marketing professional in Pennsylvania, the problems began before he struggled through a year of unemployment. Miller had tried unsuccessfully to curb his credit card usage and says he'd called his issuers to ask to cancel his cards, but he was rebuffed.

"I just kept trying to close them, and they wound up selling me another card," he says of one encounter. "They convinced me not to close it" by telling him to just pay off the card and then not use it anymore.

The problem with that? "I put them in drawers, but then I'd just take them out," he says of his efforts to curb the itch to swipe. "If they were active, I used them."

This is exactly what the card companies count on, says John Ulzheimer, president of consumer education for "If they're not agreeing to allow you to lower the limit or close the card, you have to be a little bit of a bull in a china shop," he says. "Be forceful about it. They can't make you keep it open."

Ulzheimer says it's important for all of us to keep on message when speaking to credit card customer service reps. Tell them you want to close a card or lower a credit limit, but don't tell them why. Explaining the reason doesn't help you and it could backfire if you spill and tell them you can't handle credit or you get into trouble managing money.

Miller finally acknowledged that he needed to get help when his debt on eight credit cards grew to $60,000 back in 2003. He sought out a debt management organization that negotiated lower interest rates (Miller says he was paying 29% on some cards) and set him up on a payoff schedule.

Today, Miller says he doesn't even have a credit card; he uses cash for everyday purchases, and has a debit card for online purchases and the like. "It was a huge change in lifestyle," he acknowledges.

Miller adds, though, that the feeling of relief of no longer drowning in debt was well worth the hard work it took to reach fiscal solvency, a sentiment echoed by Wolter.

She says, "I feel much more responsible, and I'm not nervous the way I used to be because there's nothing hanging over my head."
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