Kicking the credit-card habit

CAN I CONFESS?

There was one time when I got into credit-card trouble, and it scared me quite a bit. I had a department-store credit card.

I was just starting out as a reporter for the Baltimore Evening Sun. I wanted some nice clothes for work and a few items for my newly purchased condominium, which I bought a year out of college.

I ran up $500. Today that amount may not seem like much, but for me it felt like $5,000. When I opened the statement and saw that my charges were that high, I panicked. I put the card away and spent a few months paying it off. I rejoiced each month when my statement came and I could see the balance dwindling. To this day, I hold on to that feeling and remember it whenever I use a credit card.

What about you? What's your credit confession? Let's talk about it, especially given that this time of year so many people run up their credit cards. To help get the conversation going, I recommend Confessions of a Credit Junkie: Everything You Need to Know to Avoid the Mistakes I Made by Beverly Harzog (Career Press, $15.99).

At one point, Harzog was about $20,000 in credit-card debt. Her cathartic tale might help you fess up and do something about it. Harzog went to work on the debt. It took her two years to pay it off. The journey was life-changing. She ended up leaving her corporate-finance job to become a financial journalist specializing in credit cards. "I wanted to help others avoid the huge mistakes I'd made," she writes.

It's amazing that at one point Harzog was an accountant. Shouldn't she have known better about her credit-card spending? But she fell into the trap that ensnares so many people. The credit-card offers came at the beginning of her career, and she responded by accepting them without fully understanding the burden she was building for herself.

"I still remember holding the offer letters and thinking about how important I'd become," Harzog writes.

It was like a Sally Field moment, she says. She regarded the offers as a sign that the banks really liked her. The letters gave her confidence. "I bought into the hype and began to think that, yes, by golly, I did deserve these cards."

And thus a junkie was born.

Nearly two in five Americans carry credit-card debt from month to month, according to creditcard.com. Harzog outlines the top 10 bad decisions she made with credit cards. Her No. 1 mistake was opening multiple accounts. Her second: not reading the fine print.

"Looking back, I have to take my confession further and admit that I had no idea there even was fine print," she says.

Only 47 percent of credit-card customers said they understood the terms, benefits and rewards programs, according to a survey by J.D. Power of 14,000 consumers. Of those customers, 73 percent didn't comprehend the interest rate they were being charged. At least know the interest rate you're paying or the penalty rate if you don't pay, Harzog cautions. It might scare you straight.

Confessions of a Credit Junkie is an instruction manual that covers a lot of ground. Harzog explains credit scoring and why you have dozens of scores, plus credit-monitoring services, how credit is priced, how to build a good credit history, getting the most out of reward cards and getting out of debt by consolidating what you owe on a card with 0 percent interest.

She offers a quiz to determine how you use credit. Find out if you have a "walking-disaster" credit personality. If you do, Harzog says, step away from the cards.

The book also has some advice that I don't recommend. Harzog suggests, with some cautions, that if you want to rebuild your credit, get a co-signer with a good credit history. I don't believe that you ever should co-sign for anyone other than your spouse on a joint account.

But, generally, Harzog intersperses her confessions with good advice. She doesn't want you to completely abstain, but to become a better, wiser credit user.