Stupid money mistakes. We all try not to make them. Fortunately I’ve done a decent job of avoiding them in my life.
Longtime readers know I’ve been preaching against debt and the use of credit cards since the early days of this blog. I know some people believe in their use, especially for the reward points they offer. For some reason, we were never able to get credit cards to work in that way. All they created for us was overspending.
Debit cards and cash became our salvation, as we learned to only spend what we earned each month. Taking that step away from credit, coupled with our budgeting efforts were big steps in moving us toward financial freedom. The journey, in the past five years especially, has been a wonderful ride, one that has allowed us to pay off our mortgage earlier than expected.
It would be easy to let my head swell and the buttons on my shirt pop with pride at our financial success. Funny how life has a way of keeping us humble. It did to me this past week when I received a curious and infuriating letter in the mail from Bank of America, informing me of a stupid money mistake:
The letter read:
“Your above referenced account is currently past due. If you’ve already scheduled a payment, thank you. If not, your current balance is $299.56.”
My Stupid Money Mistake
Confusion followed, the kind where you think you are living in Bizarro World. How could this happen to someone who hasn’t been using a credit card? I quickly dug out my old login information for Bank of America to see if I could see where the charges originated.
The initial charge of $199 was from a yearly online subscription to an investment service I had once used. When I used the service, I had it set up to automatically renew each year on my Visa credit card. I thought the account with the subscription service had been cancelled last year but evidently I was mistaken.
The odd thing was that the credit card number the online subscription service had on file wasn’t the same as the card number being charged. Now I’m really confused. How could a charge on a cancelled credit card number go through Visa’s system?
The worst part is that the charge came through in February and I never saw it. Why would I? I don’t have a credit card account (I’m thinking). So, let’s see…it’s now July. Months of interest payments on a non-paid charge had pushed the total from $199 to $299.
After a few more moments of general confusion, a thought snapped into my brain that brought a sickening feeling to my stomach. I slowly reached over and opened the desk drawer. I began to leaf through some stored paperwork I hadn’t touched in at least a year.
That search ended with one word – “Crap.” And then this thought, “How stupid could I be?”
There staring at me was a never-officially-activated but never-cancelled credit card with my name engraved on it. And then, the memory came rushing back to me.
Visa had issued new card numbers to us over worry of a security breach. The old credit card number that the subscription service had on file had indeed been cancelled but the subscription itself had not been. When it came time for the renewal of the subscription to kick in they tried to ping the old card number. Visa, realizing the link between the old and new card numbers, sent the transaction through to the new card number (even though we had never officially called to activate the new card…still had the stickers on it).
Confusing, I know and very frustrating for me, someone who prides himself in being on top of things.
I’ve had an open credit card account sitting there, inactive but active. And through my stupidity of not canceling the account it cost me.
A Stupid Money Mistake: Keeping the Card Open
It would be easy to chalk this mistake up to a simple oversight or laziness. While that might have some element of truth, it doesn’t ultimately address why this account remained active. To share with you the ugly truth is slightly embarrassing but to be fully transparent, here is what was at the heart of the issue:
As I mentioned earlier, we’ve had tremendous success with our debit card/cash payment system. For years now it’s been standard operating procedure. Thousands of times we’ve made transactions and never had an issue with using it in any situation, at any merchant, in or out of the country.
Except once…when trying to rent a car from Enterprise.
They don’t accept debit cards, not even if you choose to select the “Credit” option at payment and sign the receipt. And they don’t take cash. I didn’t know that when I booked the rental car online (it was buried somewhere in the legalese disclaimer print nobody reads). I learned all this while standing at the airport Enterprise counter ready to check out my car.
For about 10 minutes I feared I was stuck. Fortunately I went down the rental car aisle to find Thrifty who has no such anti-debit card policy. I found something with them and was on my way.
That lone situation of being stuck without a payment option – the only situation like it in five years – created so much fear we never cancelled the account. I guess we thought that maybe a credit card as a safety back up option would be something we’d ultimately revert to.
The Final Outcome of My Stupid Money Mistake
Fortunately, in the end I didn’t end up being out on $299. When I called the online company with whom I had the subscription, they unexpectedly offered me a refund of $119 for the duration of the yearly service. That amount was credited back to Visa who then routed it to my bank account. I then cancelled the online subscription service for good.
I also cancelled my Visa credit card account…for good.
You may think that unwise and that, even if I’m committed to debit card living, I should still have active credit in case of an emergency like the one I encountered. It’s a fair point. However, if I’m going to be totally committed to paying with a debit card or cash then I’m going to be TOTALLY committed. I don’t want mistakes like this to happen again and I certainly don’t want to be tempted to use the credit card again.
And I’m not living in fear any longer. For me, that’s the bigger issue.
That fear of the “1 in 10,000 chance of being stuck without payment” cost me $180. More than that, it may have cost me some credibility here, since I’ve been preaching against credit cards for over two years now. I’m not going to be a hypocrite. If I have a conviction about not going into debt to live my life, then I’m going to live what I believe and teach.
And I’m just going to be smarter. Do better research ahead of time. Forgo automatic renewals of yearly services, choosing instead to set reminders and renew manually. Investigate more deeply company policies on using a debit card before I make a commitment to their product.
I’ve proven to myself it’s possible to live a life without credit cards. Honestly, it’s not that hard. The benefits of living a debt free, controlled spending existence have proven too fruitful in our life for me to ignore. So I’m through hiding that credit card in the drawer.
Question: Have you ever been hit with an automatic charge you had forgotten about? Did you know some rental car companies do not accept debit cards? Was it unwise for me to close my credit card account? Are you afraid of ever getting stuck without a method to pay for something? What other stupid money mistakes have you made?