A letter from the bank led to my slide into credit card debt. Here's how I got out of it

Michael wasn't long into his first job when his bank gave him pre-approval for a credit card. He describes his financial struggles and what he did to turn things around.

Michael Pont

I got my first bank account when I was nine years old.

In August of 2000, I had no concept of what it meant to earn money or how the economy and banking system worked. Nevertheless, I along with everyone else in my school were given bank accounts.

The program, Dollarmites, was organised by the Commonwealth Bank. [The 90-year-old Dollarmites program was discontinued in 2021].

It seemed like a well-intentioned program designed to develop regular savings habits and promote financial literacy. As an adult, I can now see its hidden agenda. I can see beyond the cartoon characters' booklets and fancy yellow cheque books that were given to me as a child.

Michael when he first got his credit card and bought new sunglasses.

I now realise, that I had unknowingly become a revenue opportunity for a privately-owned company whose sole responsibility was to generate profits for its shareholders.

I had no concept of what it meant to earn money or how the economy and banking system worked

Michael Pont

When I got my first job, my pay went into my Commonwealth account, the only bank account I had. Soon after, the bank sent me a letter saying I was pre-approved for a credit card.

The terms detailed that it was a card which charged zero interest for the first twelve months. All I had to do was present two of my current payslips and I was given a $6000 credit limit.

Little did I know that this would become the start of very poor financial choices that would keep me in debt for years.

I wasn’t stupid; I understood that I would eventually have to pay the money back at some stage. But being so naïve and having access to such a large amount of money I felt like there were no consequences.

I now compare the letter stating I was pre-approved for a credit card to a cigarette company sending free cigarettes in the mail. The consequences at the time aren’t visible or apparent. I was hooked. I got what I want when I wanted it and I paid little attention to developing wealth. I figured that because I had a job that I would always have income coming in and my superannuation would protect me when I was older.

But before I knew it, I had $22,000 of credit card debt at 19 per cent interest. All while I was on a low income.

Copying the words that my father once said to me, I’m not angry, just disappointed. I’m disappointed at the bank because they had all the financial information to know that I was sinking. They knew I was only earning $44,000 after taxes and HECS debt, but each time I would reach the maximum credit limit I was pre-approved for a higher limit.

I was hooked. I got what I want when I wanted it and I paid little attention to developing wealth.

Michael Pont

I had never applied for a credit limit increase, a simple notification on the app told me I had been pre-approved for a higher limit. One-click and it was done. I take full responsibility for my actions but I do feel like I was taken advantage of.

The credit card trap didn’t stop for me until I wanted to save for a property. I sat down at my desk, crunched the numbers and truly realised the extent of my erratic and stupid spending. Forget about saving for a home loan deposit.. It would take me three to four years to pay off my debt and only after that could I even start to think about saving.

I was embarrassed and ashamed. I remember thinking “how did I let things get this bad?” I had no excuse. I was fortunate enough to have a job and yet here I was struggling with money.

I knew there were financial support services available to me but I was too stubborn to admit my errors to anyone. Instead, I researched everything I could about money and the message was clear and simple, “spend less than you earn.” Something that I hadn’t learned with the option of credit.

I was embarrassed and ashamed.

Michael Pont

I sat down on my computer and created a budget, listed all my expenses and ruthlessly cut or reduced anything I didn’t truly need. No matter what your income I encourage everyone to list and calculate your expenses - you might be surprised to see exactly where your money goes. An innocent $20 dollar lunch at work twice a week costs you $2000 a year.

If there is anything that I want people to learn from this foolish mistake of mine; is for people to be mindful with money. Living off pay cheque to pay cheque isn’t living, it’s surviving.

It wasn’t easy to undo years of careless spending, I had my ups and downs but slowly I paid off all my credit card debt and have been free from debt for the last four years. At the end of the day it’s not the money lost that upsets me, it’s that I wasted valuable years of my youth that I could’ve been building wealth.

Living off pay cheque to pay cheque isn’t living, it’s surviving.

Michael Pont

Since paying off the debt I’ve amassed a very healthy investment portfolio to secure my financial future and I’m on track to buy my first house hopefully in the next five years.

I still have my credit card, which might be a shock to some. For me, it’s my way of giving the middle finger to the bank. Because I pay it off in full every month, which means that somewhere there is a file on me that shows they haven’t earned a single cent from my wallet; and for me that is priceless.