Give Me Credit

Friday 7 March 2003

Deep dark secret: I've made some mistakes with credit cards; I think a lot of people have. In my case, it started in my second year of college. I remember being unable to get approved for a Visa or Mastercard, much less the holy grail of cards, American Express. Remember that this was 1988 and things were different then. Anyway, I got a Rich's department store card, bought a few things with it, paid it off...and then I got a Macy's card. Shortly thereafter, I got a Sears card; I referred to this as my "foundation trilogy" of cards. I didn't carry balances.

After achieving this basic level, I finally achieved my first real credit card, a Chase Manhattan Visa, in 1989. Around this time, I lost parental support for my college costs, so the card was a godsend when it was time to pay for tuition and I could charge that $700. Of course, after doing that, it was easy to justify having a meal out, or buying some new books or video games, or something nice for my girlfriend, or whatever. It didn't take long for me to begin having a revolving balance and then other Visa and Mastercards. I even got American Express at some point. Another easy pitfall was the "using one to pay off another via balance transfers" trick. The problem was that I didn't understand what I was doing to myself, nor what the banks were doing to me. Couple this with my fundamental weakness of just saying "screw it" when I want something, and the seeds of downfall were sown.

Take natural progression of this situation and fast forward ten years. By the end of 1999, when I was getting the bills for the Europe trip I'd just taken, I had nine real credit cards (Visa, Mastercard, American Express - no department store or gas cards, I'd cancelled those years before) and a total debt load that far exceeded what I made in one year. Worse, most of those balances were in the 19.99% APR range, and a few cards' APRs were over 20%!

And then I started working a second job. There were some luxuries, like moving into my own place and buying lots of stuff (books, video games, DVDs) but for the most part, I was being responsible and paying off debt. Around fall 2001, I got ultra-serious about paying off debt.

Now it's spring 2003 and I'm down to one job. I'm also down to three cards with balances (and three more for emergencies.) All of these cards, balances or not, remain at home in a box, unused. My overall debt is $30,000 less than it was in fall 1999. Most of what's left is at 0% APR, with some at 2.9%. I'll be down to two balance-carrying cards before summer arrives, and they're making very little interest from me.

I got lucky in that during all this time (1988-present) I never went over my limit and was never late with a payment, therefore, despite having all these cards and some revolving balances, I have an outstanding credit rating. I also got lucky because in the last few years, a lot of banks have been competing for the consumer's credit card business, which means all kinds of low-APR offers and such. Finally, I was lucky because I had an opportunity to work off much of the debt via a second job. I realize that most people won't/can't work 80 hours a week for 3 years to get out of debt, I'm just saying that's one method.

I guess my point with this speech is that there should be some kind of required credit training for all 18-year-olds. I wish I'd had it - if I had been more responsible, I'd be living in a mansion and driving a Mercedes right now. If this discourse helps even one person before they do what I did, then it was worth writing and posting.