How I Once Got in (and Out of) Trouble With Store Credit Cards

There was a time when I could easily have been diagnosed with OO. Sure, it's a condition I made up, but in my mind, it stands for "overly optimistic." I just assumed everything was going to turn out the way I wanted it to, even when I made really bad decisions. Today, I think it's great to have an optimistic heart, but unless it's coupled with common sense and self-control, things can get messy. My experience with store credit cards offers the perfect illustration. 

Where we were in life

This was the early 2000s, before anyone imagined a subprime housing crisis, the biggest Ponzi scheme in history, or something called the Great Recession. Sure, the tech industry had taken a beating, but since neither my husband or I were involved in tech, it was little more than a news story to us. 

My husband was moving up the executive ladder in the U.S. auto industry and I was a newspaper reporter. I felt confident that we were insulated from economic hardship. After all, the auto industry was too powerful to fail and newspapers had been around since the ancient Romans. We were perfectly safe, right? 

Nope.

Leaning into credit

As an optimist, I always assumed I could easily pay off any racked-up credit card debt. If worse came to worst, I could always depend on those great auto industry bonuses. After all, they'd arrived like clockwork, year after year. 

Until they didn't. 

It was around this time that I discovered store credit cards and realized how easy they were to qualify for. I knew they carried a higher interest rate than typical credit cards, but I justified using them by telling myself: 

• "The store rewards and discounts practically make up for the higher interest rates I'm paying." 
• "Stores send me amazing promotional deals. I don't want to miss out on those."
• "The credit limit on these cards is lower than the limit on our 'normal' credit cards. Having a lower limit surely means I'll pay them off faster." 

The level of mental gymnastics it took for me to make ridiculous mistakes would be impressive if I hadn't cost us so much money.

The wake-up call

Two or three years after I discovered the joy of store credit cards, it was impossible to ignore what was happening around us. GM and Chrysler were both gasping for air and manufacturing jobs were moving offshore. Mortgage rates were holding steady above 6%, yet lenders seemed to approve loans for anyone with a pulse. The U.S. was at war in the Middle East, leading to higher energy costs. Higher energy costs led to increased inflation across the board. 

Companies were laying off left and right, and my husband was one of the people out of a job when operations came to a halt. 

I still recall sitting down to figure out how much we owed on credit cards, and how long it would take us to pay them off. I remember feeling sick. It was only then that I got serious about getting out of debt. Fortunately, my husband had a new job, but our lifestyle was about to change. 

Although there are a lot of ways to get out of credit card debt, this is the path we chose: 

• We put our cards on ice. Literally. We buried them in ice in the freezer and vowed to stop using them. If we didn't have cash to pay for something, we would have to wait until we did. 
• We created a new, barebones budget. I was so upset by calculations showing how long it would take us to pay off existing debts and how much that debt would ultimately cost us, that I wanted to make immediate changes. Stripping the budget down was the first step. 
• We doubled up on payments. That meant giving up some of the things we enjoyed, like dining out and traveling. I'm not going to lie and say it was easy, but watching our balances inch downward was encouraging enough to help us stick with it. 
• Once one debt was paid off, we'd apply the monthly payment to another debt. The feeling of accomplishment grew with every debt we got rid of and the process became easier. 

Today

I can honestly say that I never use store credit cards. I do earn all kinds of rewards points with The Platinum Card® from American Express, but I pay it off in full every Friday. After years of making credit card companies rich, I'm not about to pay interest. 

I would still like to believe I'm more optimistic than not. However, experience has taught me that hoping for the best while planning for the worst is what works best for me. Our careers may thrive, or they may disappear overnight. In either case, I'm getting ready.