So, you have a secret credit card. Maybe getting it was a spontaneous decision – you saw a special promotion offering incredible perks and went for it – or perhaps it was a well-calculated move that you’re intentionally hiding. Whatever the case, you’re here now, and you’re wondering: what next? Don’t worry; you’re not alone.
A 2022 survey by US News & Report found that 30% of respondents had lied, or been lied to, about money. This type of behavior, referred to as financial infidelity, is quite common, and the main culprits are secret purchases, hidden debts, and income deceit. So take a breath. Many people have found themselves in similar situations, and there are steps you can take to navigate this scenario with ease. Let’s dive in!
Step 1: Figure out why you have a secret credit card
Take a moment to understand why you have this secret credit card. Are you using it to hide purchases from a partner? Is it a way to maintain financial independence? Are you struggling to balance your income and expenses and using it to plug the gap? Or are you enjoying the special cash-back rewards, and it’s slipped your mind to tell your partner?
Understanding your motivations first will help determine what your next steps should be so you can make an informed decision.
The same US News & Report survey found that the top reasons for financial secrecy are:
- Avoiding conflict: To avoid arguments with their partner/spouse: 38%
- Masking issues: Cover up shame over the mishandling of money: 23.1%
- Financial control: To feel in greater financial control: 16.1%
- Helping someone else: To financially help another person: 15.8%
- Protecting their partner: Save the other person from bad news: 7%
Step 2: Review your finances
With that credit card creeping in the shadows, now is the perfect time to reassess your financial situation. Review your income, expenses, and existing debt to give yourself a better understanding of your current financial health. Knowing what your financial picture looks like will help you determine if the secret credit card is sustainable in the long run or if it’s likely to exacerbate some bad spending habits.
Credit cards may have tempting perks like cash back and airline points, but they also have incredibly high interest rates. The average interest rate is 22.75%, so late or missed payments will result not only in penalties but a speedy build-up of interest charges, too, and a potentially damaged credit rating. This is one type of debt that can snowball very quickly if not managed correctly.
Step 3: Come clean (if necessary)
If the secret credit card is causing stress or strain in your relationship, or the credit card spending is out of control, then it may be time to come clean with your partner. I’ve worked with women going through this exact situation, and the sooner you open up, the better.
For example, one client, Maggie, had taken out a secret credit card so she could invest in her business and racked up 15k of expenses. When she finally told her husband, his heated reaction was due to the secrecy and lies more than it was about the money amount itself. Honesty is key in any relationship, especially when it comes to finances, and you don’t want secrecy here to breed secrecy elsewhere.
My advice? Approach the conversation with openness and a willingness to address any concerns, understanding that you’re not delivering wonderful news and should expect they may not have a positive initial response. But once you’re clear on what led to this secret card and can explain that to them, then you should be able to get on the same page eventually.
Step 4: Create a budget
If one of the reasons for the credit card was to supplement your income, then your next step will be to create and implement a budget. Budgeting is essential for managing your finances effectively and keeping track of what money’s coming in and going out. Make time to create a budget that aligns with your financial goals and includes expenses related to your secret credit card too. This will help you stay on track and avoid overspending.
Zero based budgeting is a really effective strategy you can use for this situation. Grab a piece of paper or open up a spreadsheet. At the top, write down your income (or best guesstimate if you’re not on a salary). Under your income, list out all your essential expenses, then any debt payments you have, and then your social expenses. Then, subtract the total expenses from your income figure.
The point of this exercise is to give every dollar you earn a purpose, somewhere to go, intentionally. At the end of this exercise, the sum of income less total expenses should equal zero.
If the answer is greater than zero, then you have room to allocate this leftover money, perhaps to a faster debt paydown. If the number is below zero, you’ve overspent and need to review your expenses closely, starting with social expenses, and cut ruthlessly until you get back to zero.
Step 5: Monitor your credit score
Keeping an eye on your credit score is also important, especially with a secret credit card. And even more so if the reason you have this credit card is to supplement your income. Check your credit report to ensure there are no unauthorized charges or other issues that could impact your score.
Step 6: Seek support
If you’re struggling to manage your finances or feel overwhelmed by rising debt, don’t hesitate to seek support. Data from the Federal Reserve showed that as of the end of 2023, American credit card debt was $1.3 trillion. So you’re not alone. Consider reaching out to a financial advisor or counselor who can provide guidance and assistance.
Step 7: Tips for dealing with credit card debt
Credit cards aren’t bad if used correctly. It’s when spending goes beyond our means of repaying it that it causes issues. Here are some top tips to apply in order to use your credit card responsibly so it doesn’t end up using you!
- Set up alerts on your credit card. It’s easy for the ‘out of sight, out of mind’ mentality to kick in when spending on your credit card. It can feel like an endless well of supply until your statement arrives, that is! Setting up balance alerts is a really helpful way to stay on top of your spending so it doesn’t get out of hand and you always know what you owe.
- Create and implement a budget. I referred to Zero-Based Budgeting above as an approach to managing your money. Know your numbers and know how much you can spend on your credit card to reap the benefits while sticking within your budget so you know you can always repay it in full.
- Set up automatic payments or schedule it in your diary. Life can get busy, and you don’t want time to fly by so quickly that you miss your payment date and incur penalties or late fees as a result. Automate your payments or schedule your money date for the week before your credit card payments are due to ensure you always have time to settle the amount in advance.
Frequently Asked Questions (FAQs) about secret credit cards
Let’s talk more in-depth about secret credit cards and some FAQs to boot.
Q: Is it legal to have a secret credit card?
A: It’s not illegal to have a secret credit card. However, it is important to consider the potential consequences, especially if you’re hiding it from a partner. Financial infidelity and secrecy can be very damaging to your relationship, so you’ll have to determine if it’s worth it or if you’re better to come clean.
Q: How can I track my spending on a secret credit card?
A: Most credit card issuers offer online account access, allowing you to monitor your spending in real time. Setting up account alerts to stay informed about your transactions, balance amounts, and payments due is really helpful to stay on top of things, too.
Q: What should I do if I can’t afford to pay off my secret credit card balance?
A: First, see if you are able to make the minimum payment due. Doing so at least avoids the late fees and possible penalties. Then, contact your credit card issuer to discuss your options. They may be able to work out a payment plan for you or offer assistance programs to help you manage your debt. After this, create and stick to a budget that works for you and will work towards clearing your credit card debt.
Additional resources and the bottom line
Remember, managing finances can be challenging, especially when you’re doing it alone in secrecy. But with the right approach and support, you can navigate this situation successfully. Decide what the best course of action is for you, and get ready to take back control of your finances. You’ve got this! Here are some additional resources you may consider utilizing:
- National Foundation for Credit Counseling (NFCC): Offers free financial counseling and education programs.
- Consumer Financial Protection Bureau (CFPB): Provides resources and tools for managing debt and improving financial literacy.
- Mint.com: A popular budgeting app that can help you track your spending and manage your finances more effectively.
Laura Tynan is the founder of The Witch of Wall Street, a personal finance and investing community, where women are shown how to manage, multiply and manifest money, using simple strategies. Laura holds a BSc Hons in Finance, is a Chartered Accountant, and is certified in EFT Tapping, Breathwork, and RRT. She has been recognized by the Financial Times as a Top 20 Future Female Leader and by Yahoo! Finance as a Global Champion of Women in Business. She is a multi-award-winning speaker who has spoken at, and been featured in, Forbes. Laura hosts The Witch of Wall Street podcast and is the author of the personal finance and investing book for women, by the same name, which is available now on Amazon.
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