5 signs you might be a credit junkie

Two years ago, I watched Confessions of a Shopaholic with my daughter. If you're not familiar with the movie (or the book), I can summarize it for you in three sentences.

A finance journalist named Becky Bloomwood is a shopaholic. She goes on spending binges and ends up in horrible credit card debt. She can't pay her bills and is pursued by a sleazy debt collector.

This is all especially funny because she's a finance journalist, which gives it a cute, ironic twist. So I'm watching the movie and laughing hysterically until I realize something awful: I used to be Becky Bloomwood. No, I'm not kidding.

When I got out of college, I went through years of overspending. I'd worked my way through college, and when I got a job, I went a little crazy. I'd never had real money before. I worked in an office and, back in those days, everyone dressed up for work. So I bought designer clothes, expensive shoes, and went out regularly for power lunches.

Do I sound like I was greedy, immature, and irresponsible? Why, yes, I was all those things. My spending also had an emotional component, though. I was clearly insecure and thought all the designer duds would make me feel like a professional.

My story has a good ending, at least. I did finally face up to my debt and got a grip on my credit life. I paid off my credit card debt and even went on to become a credit card expert.

Do you think you might be a credit junkie? Here are five signs that you might have a dysfunctional relationship with your credit cards.

Sign #1: You fall in love with every credit card offer

When you see a sign-up bonus, you get way too excited. Free money! This is only a good deal if two things are true: You need the type of card that's being offered and you can earn the bonus by purchasing items you were planning to buy anyway.

Too often, people get caught up in getting the “free cash” or “free airline ticket” mentality and they don't realize they're wasting money to earn the rewards. The only way to profit from credit cards is to pay your bill before the due date and to use the card for purchases you needed to buy anyway.

Sign #2: You sign up for retail cards while you're in the store

Signing up for bunches of retail credit cards to get an instant discount is related to Sign #1. But many retail cards have super-high interest rates, so if you carry a balance on a retail card, you're never going to reap the benefits of that on-the-spot 15 percent discount.

If this is a store where you shop a lot, it might actually be a good card for you if you don't carry a balance. But it's never a good idea to agree to a credit card when you don't even know the terms. Ask for the information and take it home. Read it carefully and then you can make an informed decision.

Sign #3: You carry a balance, but you aren't worried about it

Any time you can't pay your credit card bill in full by the due date, you should feel a little sick to your stomach. I realize that some of you may need your cards to make ends meet and I understand what a dilemma that is. I'm talking about folks who can't pay their bills because they used their credit cards to buy things that aren't essential.

Resist the urge to shrug your shoulders and tell yourself that you'll pay it off next month. This is how debt starts snowballing into more and more debt. Be afraid of the debt. Be very afraid and take action to fix it. Track your spending and cut out unnecessary expenses until the debt is paid off. Oh, and stop using your credit cards.

Sign #4: You ask for a credit limit increase so you can keep spending

This is a big one. And as long as you're paying your bill on time, the banks are often happy to go along with your request. The more debt you have, the more money they make.

Maxing out your cards trashes your credit score, but if you're a bona fide credit junkie, you'll try to rationalize this by saying you don't plan to apply for new credit anytime soon. But you need to remember that a low credit score costs you money in other ways. For example, you'll pay more for insurance.

If you're nearing your limits, take a cold hard look at how you're spending your money. Put the cards away and go to a cash-only lifestyle while you devise a plan to get out of debt.

Sign #5: You keep your credit card debt a secret

I never told anyone about my debt. You know why? I felt like a loser for getting myself into such a mess. If you're in debt, it's helpful to talk to someone so you don't feel all alone. Seriously, this can happen to anyone.

I don't mean you have to reveal it online if that's not your style. Even sharing your dilemma with one trusted friend might be helpful. The power of emotional support can really help you move forward so you do what it takes to get rid of your debt.

What if you feel like you're drowning in debt?

If you have a huge amount of debt and you can't think of a way out, don't hesitate to talk to a credit counselor. There are reputable counseling agencies that can help you decide what your options are. So don't be afraid to reach out for guidance if you need it.

Do you know of any other signs that someone is in credit card trouble?

More about...Credit, Debt

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Andy@artofbeingcheap
6 years ago

#1 and #2 don’t seem like problems to me. I get a lot of bonus money from #1, and I save 5-10% on all my purchases at target because of #2. 3-5 are definitely problems though.

Money Saving
Money Saving
6 years ago

I guess it’s like playing with fire. Some of us can do it, but others without the proper control will get burned!

Beverly Harzog
Beverly Harzog
6 years ago
Reply to  Money Saving

Exactly! For some folks, getting credit cards you don’t need can lead to trouble. But I do agree that it’s awesome to make money from bonuses as long as you know when to stop. 🙂

Brian@ Debt Discipline
[email protected] Debt Discipline
6 years ago

Generally living beyond your means will get you into trouble. Using credit cards to do it it just not smart. High interest rates, etc. #5 First step is to admit there is an issue. The sooner you can do that the sooner you can begin cleaning up the mess.

Money Saving
Money Saving
6 years ago

Brian,

I’d expand that generally to nearly always. On a long enough timeline, if you’re living beyond your means you’ll always end up with no money!

Beverly Harzog
Beverly Harzog
6 years ago

You’re so right about living beyond your means. I did that for a long time and I ended up in debt and very stressed out.

Your comment that the first step is to admit there’s an issue, is right on the money. I had a “rock bottom” moment, and from that point on, I took responsibility for what I’d done. It certainly wasn’t easy, but facing up to my debt got me moving in the right direction.

El Nerdo
El Nerdo
6 years ago

I used to fall into two of those categories. I never used to worry about carrying a balance because “the future will be better and I’ll pay it off” (#3). However, #4 neutralized that– whenever I made more money, I’d request a limit increase. Eventually your income plateaus or even stops temporarily or the interest on the debt rises faster and you’re drowning. No more of that for me. I’m on a “cash-only lifestyle” now, building savings, and I don’t plan to ever return to credit cards. They really make no sense to me, and they matter less the more… Read more »

Tyler Karaszewski
Tyler Karaszewski
6 years ago
Reply to  El Nerdo

Why don’t you have a website I can read in the mornings, Nerdo?

El Nerdo
El Nerdo
6 years ago

Hey Tyler, I thought about your question for a few minutes, and the best response I could come up with was “because that would eventually get me lynched.”

More realistically though– I think I wouldn’t want to turn a pleasurable habit (talking on the internets about subjects I find attractive) into work, deadlines, and meeting people’s expectations. But thanks for asking (unless you meant it ironically, ha ha).

Laura
Laura
6 years ago
Reply to  El Nerdo

I’m with Tyler. You could try a blog that is just what you want to write about (related to money) and post when you feel like it. That’s what MMM does so why not you? Other than getting lynched, of course. 🙂

Beth
Beth
6 years ago
Reply to  El Nerdo

Don’t do it! 😉 I remember your post about focussing on your work rather than writing for GRS. Your reasoning was sound.

Besides, it’s nice to have a fellow commenter who isn’t a PF blogger!

El Nerdo
El Nerdo
6 years ago
Reply to  El Nerdo

Yes, it’s what Beth said.

And the lynchings!

Jacq
Jacq
6 years ago
Reply to  El Nerdo

It doesn’t have to be that way. A good blog should be like good fiction – the “hero” should evolve and change through the course of their blog. He/she presents us with a problem that they’re trying to overcome and shows how they’re getting to their solutions and we learn along with them through story and emotion. Probably why JD was popular and (to me) MMM is uninteresting. If I want to read Ayn Rand, I’ll pick up Atlas Shrugged and read the original.

Beverly Harzog
Beverly Harzog
6 years ago
Reply to  El Nerdo

I know what you mean about the drowning feeling. It’s horrible, isn’t it?

Kudos to you for figuring out what works best for you. That’s the key to financial success. Credit cards aren’t for everyone.

Kurt @ Money Counselor
Kurt @ Money Counselor
6 years ago

I think of these in the same way I think of risk factors for, say, heart disease. The more risk factors you choose to take on, the greater the likelihood you’re heading for trouble. Sure, some people take on lots of risk factors and skate through life seemingly with no ill effects. Such examples don’t, however, imply that the rest of us shouldn’t be wary of risk factors!

Beverly Harzog
Beverly Harzog
6 years ago

Kurt — I like that analogy a lot! Very well said.

Sam
Sam
6 years ago

I’d add that you spend more than you planned to and that you spend to get points. I spent years, early on in my professional career, utilizing a credit card and flying free on those points. Then I came to realize that even though I wasn’t carrying a balance, I was spending more than I should have (month after month) rather than putting money into savings or other longer term goals. I also realized that those free flights were not really free. We cut up all our credit cards in 2007 (as part of our pay off all unsecured debt… Read more »

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