30+ Personal Finance Experts Share Their First Credit Card Mistakes
My first credit card was a Walmart Store card and I completely ruined my credit at the time with only a $500.00 credit limit.
I can't even remember what I purchased to hit the $500 limit, but I am sure whatever it was, it wasn't worth ruining my credit for 7 years over.
But here's the thing:
Managing a credit card bill isn't a class you can take or are required to take in high school.
When we get our first credit card we don't know the difference between a regular credit card and a charge card, or a collection vs a charge off.
Usually we think we are alone in the shame of ruining our credit, but the truth is that even the best of us started off knowing nothing about credit.
I decided to ask over 30 of the top personal finance experts this question:
What Was Your Biggest Mistake With Your First Credit Card?
This guide will be a starting point for a much better understanding of what NOT to do with your first credit card and some tips on what you should do.
And let me tell you, the insights I received from these 30+ personal finance experts is some of the best advice around if you want to avoid messing up with your first credit card.
I’ve listed all of them below.
The experts all seem to agree that using your credit for fun (when you can't afford the payments) is the worst thing to actively do to your credit.
Our Personal Finance Experts
When I met my husband Greg, he had $2,000 in credit card debt.
This was 2004 and he was a college student. The big mistake he was making was continuing to use his card each month.
Even though he was making regular payments, he kept spending more than he paid in and his balance kept growing as a result.
After we dated for a while, Greg transferred his debt to a card that offers 0% APR for a limited time and no balance transfer fees.
Then he hatched a plan to pay it down over the course of one year. In the meantime, he also stopped using credit cards.
This let him pay off debt without growing his balance more.
He learned to live on a cash budget in the meantime, which wasn't that difficult because he was busy with school.
I signed up for my first credit card in college to get a free t shirt!
I thought, "Hey, I have no income. Who would give me a credit card?!"
They told me to put down my parents salary since they were paying for my college, but I told them they weren't paying for it and marked zero.
Still got the card. I used it way too much and way before I understood anything about credit and being responsible with my finances.
I don't even remember what t shirt I received.
When I graduated college, I had more than $4,000 in credit card debt and nothing to show for it.
This debt was on top of the $26,000 in student loans that I owed for my education.
With no job and no money in my account to make the minimum payments, I was forced to turn to my parents for help.
While this was a painful experience, it helped me turn my personal finances around and learn about managing my money.
After getting a job, I paid off all credit card debt in a few months, throwing all extra money toward the balance.
Now I use credit cards responsibly and pay them off in full each month.
This experience taught me the value of staying on top of your finances and not taking on more debt than you can comfortably pay off each month.
I always from day 1 treated credit cards as cash and paid off full each and every month so no credit card debt ever.
So given that my biggest mistake on credit cards was not paying attention to the reward structure.
I feel I left a lot of money on the table outside of the bonus points. For years I never gave the miles and points accrual any thought and focused more on cash back.
I thought I was winning but I was just average. No longer is the case.
My biggest mistake was giving into temptation.
When I got my first credit card, I only charged one thing a month and paid it off in full.
But then I started to see things I liked and slowly starting spending more each month.
It quickly got to the point where I was in debt and my summer job was used to pay off my debt.
This might sound a little lame as far as mistakes go, but my biggest regret with my first credit card was not thinking about credit card rewards when opening my first card. I applied for a credit card from the same bank where I had a checking account, without looking to see what other offers were available.
At the time, I think it gave me a little cash back, maybe 0.25%. But if I had shopped around, I could have signed up for a credit card with much better cash back rewards or a sign up bonus. I didn't know at the time that those kinds of deals existed. Certainly not my biggest financial mistake, but I have since learned to be strategic about opening credit cards to maximize my reward points, and because of that my family hasn't had to pay for a flight in over 3 years!
My biggest mistake with my first credit card was falling for one of the biggest credit myths: that you need to carry a balance to help improve your credit score.
For the first several months of having my first credit card, I would keep a small balance rolled over from month-to-month, because I (stupidly) thought it would boost my credit score.
This caused me to pay several hundred dollars in interest fees that I could have saved on, if I had known any better.
Lesson learned: there's absolutely zero benefit to carrying over a balance from month-to-month.
Be sure to pay off your balance, in full, each month to get the best credit score.
My biggest mistake was getting one in the first place.
I used it for everything in college and when I graduated, I had over $10,000 in debt on that one card and nothing to show for it.
Thankfully, I have since paid all of my debt except my mortgage.
My biggest mistake was not starting small.
I didn't really understand credit scores and card eligibility back then, so I applied for the same card that my Dad had since I knew it had served him well.
Of course, I was denied; at that point I started looking at other cards with sign up bonuses and applying for them.
I think I was denied for 5 cards before going for a student card with Capital One, which I got.
Those inquiries hurt my score for a couple years and slowed me down from applying for non-student cards once I'd started to build a bit of a history with my student card.
The advice I was given as a young adult was to get a credit card, rack up the balance, and carry it from month to month.
Supposedly, that was the best way to build a credit score when you're starting from scratch.
Biggest mistake of my life! It led to tens of thousands in credit card debt.
Once I wised up, it took me years to pay it off.
With so much misinformation out there, I learned you really need to do your own research to know what's best for you financially.
My greatest mistake with using a credit card occurred during my first few years of college.
At the time, I had been warned endlessly about how credit card spending could get out of control or that is would be easy to forget to pay my bills on time.
Fearing this, I made the majority of my purchases using a basic debt card, at times even incurring $1 fees per transaction because of surpassing a monthly transaction limit.
Had I diligently used a credit card that offered cash back rewards, I would have gradually improved my credit score while earning rewards and avoiding debt card fees.
Ultimately I think students should educate themselves about how to properly use a credit card rather than fearing them.
My biggest mistake was getting a credit card with the idea of using it strictly for emergencies.
It’s a pretty typical mistake really, but I still wish I’d realized much sooner that what you actually need for emergencies is MONEY, not a fast track to debt you can’t afford to pay off.
In my case, the emergencies just kept coming, because I was stereotypically young and dumb.
It didn’t occur to me that I needed to budget for unplanned events and build an actual emergency fund.
When I was in college I signed up for a credit card with a terrible interest rate in exchange for some BS freebie they were giving away.
I can't remember what the freebie was, but it wasn't worth anywhere near what I had to pay in interest over the years.
My biggest mistake was getting a credit card for a 30% discount.
I signed up for one at a department store because they offered a discount on a big purchase I was making.
The deal diva in me was excited; little did I know that there were much better rewards available for using a credit card.
Now I’m more strategic with my credit card usage and use them to rack up points that allows my family to travel for free.
I can’t tell you how many times my 17 year old self paid her credit card bill a day late—I would say it was most times. Who knows how much I lost in interest and late fees. But now I stick all of my cards on autopay. I keep more money in my checking account than I charge to my cards which has resulted in me not missing a payment in years. Thanks to autopay, I’ve earned tons of cash back, have no credit card debt, and my credit score is above 820.
I didn't realize my biggest credit mistake with my first credit card until after a decade after I opened the card.
When I opened my first card, I simply applied to an offer I received in the mail from a bank I had never heard of.
Unfortunately, a decade later that company decided to add an annual fee to all of their credit cards.
The card offered no rewards and had an insane APR, so there was no way I was going to pay to keep the card in my wallet.
Sadly, that also meant I had to close my oldest line of credit which will likely slightly damage my credit score.
Try to open your first credit card with a reputable bank that will stick around for the long term, if possible, so you can keep the card open as long as possible.
The mistake I made was not knowing how to properly leverage a credit card in the first place.
I immediately maxed out the limit of my first credit card when I was in my late teens and that begin a cycle of debt and living paycheck to paycheck.
That decision, along with many other bad ones, also led to $55K of consumer debt over the span of a decade and change.
I did rid myself of debt in 2012 and have kept that freedom since and gained a lot of financial wisdom and expertise.
I am very selective of the credit cards I hold nowadays as they provide must me with benefits that I will actually use.
I do pay a high annual fee on a couple of them because I calculated that I come financially ahead as a result of the benefits and savings they provide.
Do the math when it comes to credit card offers and don't solely consider sign-on bonuses.
When I signed up for my first credit card, I was completely preoccupied with researching the rewards programs instead of the fees.
After a few years, I paid more in annual fees than I stood to gain from the miles I had accumulated.
I was also scared to close the account down because I didn't want to hurt my almost non-existent credit history.
I was just out of college when I got my first credit card-$300 limit; I was so excited.
Made me feel grown up, and I was responsible with the card because my first boss was an amazing mentor and influence.
He taught me how to try to live within my means.
Plus, he looked at my expense reports and could see my spending habits.
I've made more credit card mistakes after this first card over the years by trying to qualify for elite status and paying high fees to do so.
Do the math on annual fees to see if they truly make sense.
I got my first credit card in my first year of college.
With less than a year experience of the western world under my belt, my understanding of how credit work was fuzzy.
The credit card was offered during our frosh week and I fell for it; zero percent interest for a full year.
Of course, i thought it meant i don't have to pay anything on it for a year, so i ignored the card.
A year later, i had to hustle to clear my name from the collectors.
Unless you are an expert in credit card targeting, i do not recommend playing around with zero percent credit card.
My second year in college I got a little too spendy with my first credit card and maxed out the $500 limit.
I had no way to pay it back in a reasonable amount of time. I recall sitting at the desk in my bedroom in tears and sheer panic.
I had always paid off my credit card in full, or within 2 months.
But, this time - oooh weee - $500 was like Mt. Everest...insurmountable to me.
Somehow I ended up on the phone with my mother.
I asked her for guidance on what to do...I was T.E.R.R.I.F.I.E.D. Any advice was welcome.
Then, she shocked me and asked how much was the bill.
I told her and she replied, in a calming voice, "I'll send you the money". Wait? What?
My mother never did things like that.
But, she did that time and I learned a huge lesson about my feelings regarding credit card debt.
I have a low-tolerance for debt and always pay cards in full every month.
I got my first credit card prior to my freshman year in college; it was a Capital One Platinum card.
At the time, I knew nothing about credit cards.
One of the account managers told me it would be a good idea to open up one so that I could build credit.
The biggest mistake I made was not taking time to thoroughly research the benefits of having this card.
If I would have done my due diligence, I would have known that this card offered no rewards points. Five years later, I converted it to the Quicksilver card.
I initially signed up for a credit card that had a monthly fee - yes, a MONTHLY fee of $14.
It was the only card I could qualify for the time and as I build my score up, I started to feel like paying that fee was a waste of money because it really was.
I called the company and they said the only way I could get out of paying the fee would be to cancel the card so I did that and lost all my positive payment history with them.
Looking back, I would have been better off signing up for a secured credit card with little to no fees that would have the possibility to be unsecured in the future.
I didn't use my first credit card very often, and when I moved out of my parents' house I forgot to change the address on my account.
Since I didn't change the address, I didn't get the monthly statement when I did use the card and I didn't see the statement until I went to my parents' house a few weeks after the payment was due.
As a result, I had to pay a late fee and interest.
Fortunately, it was a fairly inexpensive lesson that taught me the importance of being more organized.
I received my first credit card in college.
It came a PIN number so I decided to use it for make ATM withdrawals so I only needed to carry one card and could leave my debit card in my room for safekeeping.
What I didn't realize is those withdrawals were considered a cash advance and I had about $20 in interest charges on my next billing statement.
My very first credit card was my 3rd year in college.
It was intended to be for emergency situations, but I used it for fun and maxed it out within a year.
In the end I ended up "settling" my debt paying around 50% of the balance when I graduated college to get a fresh start.
Settling that credit card hurt my credit score for 7 years and effected my ability to get more credit at fair rates as well as qualify for other loans (car etc) during a time when I was actually a responsible adult.
The first credit card I ever received was in high school.
My parents cosigned for the card and I was told to start using it on small things like gas and food.
They made sure to tell me to pay off the balance each and every month. It was a great way to learn how to be responsible with a credit card and start building my credit at a young age.
I have always been fairly responsible with my money so owning a credit card at a young age was not a problem.
The big mistake came when I decided to close my account and open a new card going into college.
Closing my first account really hurt my credit score as my "credit history" tanked back to zero.
I learned the valuable lesson of letting credit lines stay open for various reasons.
I now hold a credit score near 800 and have never looked back on my mistake of closing my account.
My first credit card was cosigned by my parents for me when I was 16 years old.
I was told that I needed to keep a balance on my credit card in order to build my credit.
By doing this, I always kept a balance on my credit cards for many years thereafter due to this flawed strategy.
Looking back now, I can't even imaging how much money I spent over the years in interest in an attempt to raise my credit score.
My biggest mistake with my first credit card is that I used it on dumb things.
I originally opened the card to help me with emergencies.
While I did use the card for emergencies, I started to use if for things such as clothing, shoes, and even a couple of trips.
Once I used to buy nearly $100 worth of alcohol for my friends and I at the bar. Man, was I stupid.
My biggest mistake was not taking my credit seriously.
I treated it like the balance would magically be paid by making the minimum monthly payments.
I didn't take into consideration the interest rate and how that would build up over time.
I also didn't take into consideration how much money I was spending.
For example in college I put my entire spring break to Cancun on my credit card, which was a lot of money.
My biggest mistake with my first credit card is that I used it to gamble online.
It was the beginning of years of online gambling which ruined me financially.
I often wonder if I didn't have that credit card, if my gambling addiction might have played out differently.
I ended up having 8 credit cards at one point in my 20s, transferring balances from one to the next to keep the crippling interest at bay.
I ended up going bankrupt which was the best thing that ever happened to me.
No more credit, ruined credit rating, but I was free to work on my addiction and work on myself.
I was able to start rebuilding my finances and my final gambling relapse was in 2011.
I've been able to build up a nest egg of over $100,000, which seemed impossible when I was gambling constantly.
I am now happily married with a new son born 11 weeks ago and that first credit card is a distant memory.
My biggest mistake on my first credit card was not being aware of my credit limit being so low.
I received a low-limit card and didn’t realize how low. When I made my first purchase, or tried, I was denied my purchase attempt.
I had a $300 limit and attempted to buy a discounted television through my employer (Circuit City).
I had to ask for assistance from my parents to cover the remainder on one of their credit cards to complete the sale.
I paid them back immediately and only used the card for the chance to receive an added discount on the sale.
I believe it also provided a free extended warranty on a major electronics purchase if I used the card within a year of approval.
Regardless, I learned early on the importance of having many available credit lines for when I may need them.
My first mistake was not taking the time to fully understand APR.
As a young, 18 year old kid I got my first credit card with no prior knowledge of how the process worked.
I assumed I could get a credit card and pay it later with no penalties. Boy, was I wrong!
HUGE thanks to everyone who contributed to this much needed post! Please share if you think this is useful!
If you are currently going through this situation, please feel free to ask questions in the comment section below.
Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s and contributors alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.
Sa El is the Co-Founder of Credit Knocks. He is a Credit Expert, a Licensed Insurance Agent, & a Real Estate Agent. He grew his credit from the low 500’s to the 780s in under 3 years with no prior credit knowledge. Sa El is on a journey to destroy the Decliner and to give as many people as possible their buying power back.