Importance of Financial Education in Understanding Credit Cards

After three months of living with her roommate, Briar was super stoked to finally have her own space. She had landed a job and was figuring out how to handle this whole independence thing. Things were getting better between her and Sage; they were starting to bond more as friends instead of just being roommates. They began cooking meals together, sharing laughs about guys and relationships, and Sage even scored a job at her dad’s friend’s company. Lavender was also becoming an amazing friend to chill with when she wasn't busy running around.

So, living in a small apartment with two other girls wasn’t too bad overall. Briar wasn’t really into her job, but hey, it paid the bills, and that’s what counts, right? Sometimes she wished she had a bit more cash to keep up with Lavender and Sage. It felt like they were always going out to eat and ordering full meals while she was stuck with just a small salad. Plus, it bugged her that the last time she got new clothes was during their trip to Cancun. It just didn’t seem fair since she worked just as hard as them but always ended up feeling broke.

Briar often found it super frustrating that Sage was living the life she dreamed of. Sage had landed a job at this amazing fashion design house right in the city, which was exactly where Briar wanted to be. Plus, Sage always looked incredible going to work! She’d come home raving about all the cool clothes and awesome stuff she got to see every day, not to mention the sweet perks she brought back from her job. Meanwhile, all Briar could manage to bring home was a quick fast food meal from her own job every now and then.

It looked like her roommates had it a bit easier than she did, and she couldn’t figure out what she was doing wrong. She put in the hours every day but didn’t feel like she was getting much back from it. Sure, her bills got paid each month—big deal! But where was the fun in just covering rent on time? What was the trick to living a better life?

Briar’s coworker mentioned that it’s easy to get a credit card, especially if you have a job, and that you can get a card with a limit of around $1000. This conversation highlights Briar’s lack of knowledge about credit cards, which is not uncommon, especially for those from small towns.

What is a Credit Card?

A credit card is a type of loan that allows the cardholder to borrow money from the issuer to make purchases, pay bills, or get cash advances. The issuer sets a credit limit, which is the maximum amount the cardholder can charge on the card. In this case, the coworker mentioned a credit limit of $1000.

How Do Credit Cards Work?

When you use a credit card, you’re essentially borrowing money from the issuer. You receive a statement each month showing the amount you owe, and you must pay at least the minimum payment by the due date to avoid late fees and penalties. You can choose to pay the full balance, the minimum payment, or any amount in between.

So, when Briar got home that night, she stumbled upon this super cute credit card that would totally match her wallet. She could just imagine how awesome it would be to whip it out when she was paying for stuff—like, oh my God, it would be amazing! Without wasting any time, she applied for it and got approved right away. They told her the card would be in the mail within 3 to 5 business days. So now, every day after work, Briar was checking the mailbox, hoping to find that shiny new card waiting for her.

Credit Card Approval Process

The coworker mentioned that having a job is a key factor in getting approved for a credit card. This is because credit card issuers typically consider an applicant’s income, credit history, and debt-to-income ratio when deciding whether to approve their application. Having a steady income and a good credit history can increase the chances of getting approved for a credit card.

“ What’s up, babe? I’ve never seen someone so excited to receive mail, " said Sage.

“ I know, right she’s checking the mail like she’s expecting an early Christmas present in July” said Lavender

So, Briar was totally zoned out during the chat because she was super pumped about checking the mail. Finally, on day three, it arrived—her gorgeous new pink credit card! It had a $1000 limit, and she couldn’t contain her excitement. The first thing she did? Ordered dinner for herself and her roommate that night!

“ Did you win the lottery?” Sage asked, puzzled as Briar rushed to pay the delivery guy.

“ No, I just got a new credit card and I just wanted to test it out for the first time,” Briar said honestly

“ Hey, just a heads up about that girl and her credit card. My dad always told me to be careful with them. He said if he’s not giving me one, then I probably shouldn’t get one myself until I’m old enough to really handle it.”

“ Well, I don’t think it’s such a big deal. I’m gonna use it wisely. I’m not gonna overspend on it or anything. I just wanted to do something special for all of you guys tonight.”

The conversation was dropped, and the girls enjoyed their meal.

The next day, Briar took a peek in her closet and realized she was totally lacking any fresh outfits. With fall around the corner, she thought, “Why not grab some new stuff?” Plus, it would be nice to look as stylish as Sage for once.

So, she spent a few hours browsing online for the perfect looks.

The next month, Briar got her first credit card bill. She had racked up $500 that month on clothes and takeout. The minimum payment was just $33, so she made sure to pay that off without any issues. After that, she kept using the card for movie tickets to catch a couple of shows, and for lots of meals out.

Another month passed, her new credit card bill showed up, and she found out she had gone over her $1,000 limit. The minimum payment was $100, so she went ahead and paid that off. She was planning to pick up some extra shifts to tackle that credit card debt. After the lesson learned from the previous month, she knew she had to prioritize paying her rent on time along with all her other bills. But just when she thought she’d grab those extra shifts, someone else swooped in and took them before she could. Now she’s stuck wondering how she’s going to make some extra cash to cover that credit card bill.

One evening, as Briar sat on the couch engrossed in a Netflix series alongside her friend Lavender, an unexpected interruption shattered her moment of relaxation: her phone rang insistently. The screen displayed an unknown number, prompting a knot of apprehension to form in her stomach. With a deep breath, she answered; it was a collection agency regarding her credit card account—an unwelcome reminder of her financial struggles.

“Is this Miss Briar?” inquired a voice from the other end, devoid of warmth yet laced with authority.

“Yes, this is she,” Briar replied, her voice trembling slightly as she braced herself for what was to come.

“We are contacting you on behalf of your credit card company,” the caller continued matter-of-factly. “We need to discuss your outstanding balance. It has come to our attention that you have not made a full payment in three months.”

Briar felt her heart race as she processed his words. “I understand,” she managed to say, trying to maintain composure despite feeling overwhelmed. “I’m currently working extra shifts to ensure I can pay off my balance as soon as possible.”

“While we appreciate your efforts,” he interjected firmly, “it is imperative that you provide us with an estimated timeline for your payment. As per your agreement, interest continues to accrue daily on your account—your current total now stands at $1,200.”

Briar’s breath caught in her throat at the mention of that figure. “When did it escalate to $1,200? I only charged $1,000!” Her voice cracked under the weight of disbelief and fear.

“ According to our policy outlined in the fine print, we are entitled to impose higher interest rates due to your outstanding balance not being paid in full. Additionally, please be aware that over-limit fees may also apply. When do you anticipate making your payment?”

“ As soon as possible” Briar replied and hung up the phone

“ What was that all about?” asked Lavender.

“ It’s nothing, don't worry about it,” said Briar looking panicky.

The dim light of the television cast shadows across her living room, where remnants of takeout boxes lay scattered on the coffee table. The familiar theme song played softly in the background, but she barely registered it; her mind was elsewhere.

“What am I going to do?” she pondered, her mind racing as she struggled to concentrate on the show flickering before her. The weight of impending bills loomed heavily over her thoughts. How will I manage to repay this credit card debt?

"Hey guy the internet bill is due in a couple days," Sage said matter of factly as she slid in on the couch beside Lavender.

The reality of her financial obligations pressed down on her chest like an anchor, leaving little room for distraction or solace. Each bill felt like another wave crashing against her resolve, pulling her deeper into uncertainty.

She chuckled softly at the irony—here she was, glued to a show about people winning big in Vegas while she could barely scrape together enough for the internet bill.

With a sigh, she reached for her phone to check her bank balance one more time—maybe there was still hope if she could just figure out a plan before the next bill arrived.

"Guys, I have a big problem," Briar said hopelessly

She needed help and she knew it. She confessed everything. About paying her credit card bill, and how she was spending her money. Not having the money to pay her bills and the credit card.

To tackle this problem, it’s essential to break it down into smaller, manageable tasks. This can be done by:

1. Assessing the Debt

Determine the total amount of credit card debt and the minimum payments required for each card. This will give you a clear understanding of the scope of their debt.

2. Creating a Budget

Make a budget that accounts for all necessary expenses, including the minimum payments for the credit cards. This will help you understand where their money is going and identify areas where you can cut back.

3. Prioritizing Payments

Determine which credit card has the highest interest rate and prioritize paying that one off first. This will help reduce the amount of interest paid over time and make it easier to manage the debt.

4. Creating a Plan

Develop a plan to pay off the debt, including a timeline and specific steps to take each month. This will help you stay on track and motivated to tackle your debt.

In short, Sage is guiding Briar through the tricky waters of dealing with credit card issues and collection agencies, while Lavender is helping her map out a game plan to get everything paid off quickly. It’s teamwork at its best!

Briar’s lack of knowledge about credit cards highlights the importance of financial education. It’s essential to understand how credit cards work, the benefits and risks, and how to use them responsibly to avoid debt and financial difficulties.

If you’ve got any questions about this short story or anything else, feel free to ask!

Let us know what you think!