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Almost Done Paying Off My Credit Card What Now?
CStar
Registered User new member
Registered User new member
I was dumb and when I turned 18 I got a credit card. Of course I ended up not making payments so the debt was sold to collections. I’m finally taking care of it and my last payment will be in January. So now what do I do? Is everything just done and that’s it or do I need to ask for a certified letter stating that the debt is paid? This is my first (and hopefully last) credit card so I’m a little clueless.
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Also get a copy of your credit report just to see where you stand.
Get a decent job and start putting some money in the bank. If you can put a sizable chuck of money down its easy to get a loan even with a bad credit rating.
Indeed, this. You may need credit in the future for things like, you know, a house. So keep the credit card, and even use it responsibly, just pay it off in full every month. This builds your credit rating. Which is good.
It boggled my mind until I realized that it's a different view of how you see credit. For my coworker, she sees credit as a + to her account. So it looks like this:
+75 - bank account
+23 - cash
+1500 - credit card
So she "has" 1598 dollars.
I see credit as this:
+75 bank account
+23 cash
–20 credit card
where 20 is how much I've put on the card. I've always seen credit as simply a short-term "loan" against your available cash; a subtraction from the budget. The limit is meaningless -- I simply use it for what I normally buy, and anything I do buy I "visualize" as a negative attribute.
My coworker starts with the idea of the limit being her actual cash, and then spends accordingly (kid, candystore).
Credit in theory is good. For many people, it's a positive thing, as it's fast, easy, and straightforward. The fact that the responsibility is on the user is what gets so many people in trouble. For example, I know plenty of people who just don't keep track of their money and have stories of how the bank gave them a slap on the wrist. There's plenty of stories on H&A in the archives about people trying to reverse bank fees because they weren't paying attention.
But to answer your question, once it's paid off, you're set. If you cannot handle a credit card, then don't worry about getting one anytime soon.
You get used to it and the banks also treat you real nice because the more debt the more your business is worth to them. Just make sure to do a budget before you spend money you don't have, balance the budget regularly and you will be fine.
When I was in college my money supply was very irregular. My scholarship gave me a lump sum at the start of the semester, I worked a job that was essentially freelance so that'd be very inconsistent, etc. I attempted to set a budget and be disciplined, but I was dumb and in college. Credit was nice in that I was never in the position of having to go to the food bank to eat, but it slowly turned from "I'll use credit if i have to" to "I'll use credit when I have to" to "I'll use credit when I want to." The damage ended up not being all that bad (about 5k total by the time college was done, with 1/2 of that paid off now 6 months later), but I can understand how people end up in that situation.
This will not help you build credit. You are not rewarded for shutting yourself off. OP's best bet IMO is to start putting little things on (like movies) and immediately paying them off, and checking in a month and then every six months to see where he stands.
PSN: TheScrublet
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This was almost exactly my situation too.
I worked in college, but the way my college did workstudy is they paid your wages with your scholarships, so I got paid at the beginning of a quarter.
So I did what you did, and got a credit card, but ended up developing some bad habits.
I eventually undid the damage, but like you I can understand how some people can get into a bad mindset with it.
the "no true scotch man" fallacy.
Much like EggyToast points out, credit cards can be used as a short-term loan to yourself. If you know you can save (and/or have discretionary budget of), say, $500 a month and there is something you want to buy that is $1200, you can either wait 3 months and then buy it OR buy it now and pay it off in 3 months. You'll pay some interest (at 10% interest for those three months, you pay ~$20 in interest).
The key to all of this is self control. I will use my credit card for small short-term loans to myself because I know I can pay it off and will do so in a few months. If you don't trust yourself, then don't let yourself do this. One option is to tell the bank that you want a capped limit of $X. Credit card companies love raising the max balance on cards for anyone who can actually pay them off because, as their thinking goes, you will use that available credit. However, if you call them and say "My limit is $5000 but I'd like you to lower to $1500", they will do it. If they don't, just go elsewhere. Side note: Too much available credit can be detrimental to your credit score because it shows you have the ability to go into debt.
Congratulations for taking personal responsibility and doing what was necessary to account for your mistakes. It is all too uncommon in this day and age. Now go buy a 52" Plasma TV to celebrate!
Just kidding!
Murphy's Paradox: The more you plan, the more that can go wrong. The less you plan, the less likely your plan will succeed.
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Murphy's Paradox: The more you plan, the more that can go wrong. The less you plan, the less likely your plan will succeed.