I Made This Mistake With My First Credit Card -- and It Cost Me Thousands

A missed credit card payment came at a big cost.

When I was in college, I signed up for my first credit card. It was a store card for a clothing store that I liked. 

After I opened the original card, I found that I liked being able to charge purchases and earn rewards. As a result, I subsequently signed up for several more. At the time, there weren't protections in place to prevent credit card companies from marketing to college students so I found myself with a wallet full of cards. 

Unfortunately, this resulted in me making a big mistake with the first card that had long-term consequences in terms of my ability to borrow at an affordable rate. Here's what happened. 

This was the big mistake I made with my first credit card

After my first credit card inspired me to open several more, I found myself with more cards than I could comfortably keep track of. As a result, I ended up forgetting that I hadn't made a payment on that original card even though I had made a purchase on it. And my payment was very late -- more than 60 days. 

The credit card company reported my late payment to the credit reporting agencies, and they also charged me late fees and interest for two months. The record of the late payments remained on my credit report for years even after I had long stopped using that store card. And this came at a big cost. 

Here's how my mistake ended up costing me thousands of dollars

The initial cost of the missed payments came to $70 for two late fees, as well as interest charges on the purchases I made. Since I didn't pay off my statement in full by the deadline, I paid interest for the two months that I carried a balance before I realized I had made a late payment. 

These costs were high enough, but they were just the start of the expenses associated with my big error. Because I did not have much of a credit history at the time when I missed my payments, the fact that I was very late with paying my cards had a big impact on my credit score. It went down over 100 points, leaving me with a score that was below 700. 

Although I never repeated the error I made with my first card, it took me a very long time to bring my score back up to the level where it was considered excellent. And during the time the late payment was dragging down my score, I took out a car loan as well as a mortgage. While it's impossible to know exactly how much higher my rates were, I definitely was not offered the most competitive rates as a result of the fact my credit score was lower than it should have been.

Since both mortgages and car loans are large debts paid over several years, the difference in the interest rate resulting from my initial late payment cost me thousands of dollars. Because I never want to find myself with a lower credit score again, I've made sure not to make a similar error in the future by setting up automatic payments and keeping my number of cards at a manageable level. 

Unfortunately, this initial error I made shows how far-reaching the effects of a single credit card mistake are. Hopefully, others can avoid my error by making sure they are especially careful with a first card since it plays such a big role in developing your credit history.