I’ve been in the finance industry for over 20 years, so one may assume that I have not made any mistakes when it comes to my personal finances.  Like many, I’ve had to learn some hard lessons along the way.  My hope in sharing my story is for others to avoid a similar fate.

In my early 20’s I made the decision to obtain my first credit card.  I was working at a financial institution at the time, but this was the late 90’s and many credit card companies were not willing to extend credit to someone with no track record.

I wanted a credit card to start building up a credit history.  I had just started working after completing a university degree, so I also wanted some credit available in case of emergencies.  At the time, my income was $14,000 a year and I was excited to be offered a card with a $3,000 credit limit.

This is the time to mention that I was in a relationship, and we had just moved in together.  My partner was working full-time but had the same difficulties in obtaining credit.  As a result, I made the decision to add him as an authorized user on my account (mistake #1).

Rather than using the card for what was intended (mistake #2), my partner and I enthusiastically used our cards, once activated.  I bought things that I had been denying myself when the funds weren’t available to me, which looking back I couldn’t afford (mistake #3).

I was in shock when the first credit card bill came, and not only was the credit card maxed, but it was over limit.  I had enough funds available to make the minimum payment and bring the card back within the credit limit.

That was a big lesson for me.  I decided to pay off what I had used on the credit card as quickly as possible.

My partner, on the other hand, proceeded to keep the card balance at the maximum limit for the remainder of our relationship.  When the relationship broke down, I offered to have him pay me back over six months, and I was provided with a series of post-dated cheques.

The first five payments went through.  Unfortunately, the final payment was not made, as my former partner added a stop payment to the post-dated cheque.   There was little I could do, so I used my emergency savings to pay off the debt.

This experience stayed with me, and I learned from it.  I never entered credit card debt again.  The next time I entered joint debt was with my spouse, but for the best reason – to purchase our first home.

The Financial Consumer Agency of Canada has a good explanation of the responsibilities of cardholders.  The primary cardholder is the one ultimately responsible for making payments on a credit card and managing the debt responsibly.  Authorized users, on the other hand, have no legal responsibility for covering the charges made on an account.  So, be careful who you give access to your account, and keep your credit to yourself.

Key takeaways from this story:

1. Before adding anyone as an authorized user to your credit card, consider the implications and be aware of your responsibilities as the primary cardholder.
2. Credit cards are the most expensive form of borrowing, next to payday loans. If you need to borrow funds, consider other lower rate options, such as a line of credit, to reduce your borrowing costs.
3. Pay off your credit card bill in full monthly, to avoid any interest charges.
4. Do not run a purchase through your credit card if it is something you cannot afford.
5. Have emergency savings in place for the unexpected.
6. It is important to have money conversations with your partner, to ensure that you are communicating about expenses, savings, and debt.