I Maxed Out My Credit Card on Accident – Why It’s Important to Check Online Banking

When I was 16, I accidentally maxed out a credit card. You probably don’t think this is anything surprising, but it shocked me at the time. Why? Two key reasons.

I had never spent more than I made

I had set up my credit card to auto pay in full

And yet, my credit card had just gotten declined in the store. How on earth did that happen? Well, there were two major mistakes. One was made by me, and one was made by the bank. Let’s explore how these two mistakes maxed out my credit card on accident, and how you can avoid the same.  


Issue #1: The Bank Made an Error

When I went in to sign up for my credit card, I had it set up to auto-pay it off in full each month. My mom was with me since this was a “teen” credit card. What actually happened was that somehow the bank set up my credit card to auto-pay the minimum each month. Why does this matter? If I spent $100 each month, and the minimum was $25, then I’d still owe $75 plus interest the following month. This kept happening until ultimately, I maxed out my credit card.

Issue #2: I Didn’t Check My Online Banking

Call it dumb, call it naivety, or call it what you will….I did not check my online banking. At all. Not once. All I knew was that my checks were direct deposited from the ice cream store that I worked at, and that I made sure I spent less than what I made. I did pay attention to my direct deposit slips, but that was it. This was before the smartphone era (I’m 24 but still, most high school students back in 2010 had flip phones or some other iteration of a “dumb” phone). So it wasn’t a priority to check my money online. After all, in my mind I had done everything right. And really, I had. But failing to check in meant I didn’t know what was going on until it was too late.

Imagine my shock when I saw the balance on my credit card was over my $1000 limit. Thankfully, “teen” cards didn’t give large limits or this could’ve been much worse. My mom went with me to the bank to talk to an account manager and we explained the situation. My checking account was also with this bank, so it was easy for them to see that I always had maintained enough in my account to pay off the balance. I can’t remember if the bank reversed all of the interest, but I do remember they took back at least some fees. My credit card was paid off that day and I haven’t carried a balance since. Now let’s get into how you can avoid a silly mistake like this. While interest on $1000 may not seem like much, compound interest starts to accrue fast.

 

 

How to Avoid Accidentally Maxing Out Your Credit Card

Check in online- most banks have an app that you can check your account balances in a matter of moments. So do it! If you’re scared to open your account, it might mean something else is going on.

Set Up Auto-Pay-  credit cards should have the option to pay off the balance in FULL each month. Pick that option, and mark the date in your calendar that it will come out of your checking account. But again, in my case I had done this and still accidentally maxed out my card, so be sure to still check in online.

Pay-as-you-go- You may need to do this manually, but I like to submit payments more often. Actually, I like to submit payments as they occur. As soon as an expense posts, I like to pay it off. It keeps me feeling in control and that we’re receiving the benefits of travel rewards without any risk of downsides.

Ditch the card- I’m a huuuuge credit card travel rewards fan. In fact, my biggest regret in our financial journey was closing my travel reward credit card during Dave Ramsey’s FPU. But that said, some people cannot handle credit cards. And credit card companies and banks do make it very easy to get into credit card debt. Do not feel bad if you “can’t handle” them. Paying in cash or with a debit card is also great! The key is that you own your finances and don’t let them own you. 

If this has ever happened to you, you can always compare your credit score. I’ve only used CreditSesame for this since it’s free. At this point, we don’t care too much about credit scores. We pay off everything in full and make all payments for bills on time.

Also, let me know if anything like this has ever happened to you! More people have accidentally maxed out credit cards than we realize. It’s normal to feel a bit of guilt or embarrassment, but the key is to getting back on track! Credit card debt was not a part of our debt free story, but it is for so many.

-Rachel


A Few More Things:

Why I Wish We Weren’t Debt Free

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Hi, my name is Rachel Smith. I’m a personal finance nerd,  Aldi connoissuer, book lover, yoga enthusiast, and budgeting wiz. I was born and raised in Anchorage, Alaska but currently call Michigan home. I want to help people with their finances and eating healthy on a tight budget (no matter what your cost-of-living area is!)



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