I frequently undertake arbitrary challenges to keep life entertaining. I once challenged myself to go without a haircut for a year. In light of one reader’s comments on a column I wrote for CBC, I recently challenged myself to go 60 days without my credit card.
Super. Easy. One minor hiccup. Really.
Now that I have emergency savings, I don’t need to use my card. I planned to cancel it.
But…hold up. Bad idea, said my more money-conscious friends. It will result in a hit to your credit score, they said.
I am very protective of my credit score. For me, it’s like a Good Girl Score.
I needed to find out if this was fact, so I spoke with Brian Betz from Money Mentors – a non-profit organization that helps people learn about money management. He said the most important factor in determining credit is whether or not you pay your bills on time. Check.
He said the second most important factor is credit utilization: how much credit you have versus how much you’re using. He said that if I cancel my card – and I don’t have anything else to vouch for my credit-handling abilities, such as a bank loan or line of credit – it could hurt me if I ever need to apply for credit again. “Sometimes, having no credit is just as bad as having bad credit,” Betz says. “We live, unfortunately, in a credit-oriented society.”
You know that fantasy you have about going back in time to that one super abusive relationship you had, and being the one to end it, the one to decide when it was over. I had that fantasy. I was going to call up my credit card company and politely, and smugly, tell the nice person who answered the phone to get bent.
Frankly, my naivety around this subject shows just how little I knew when I signed up for this card when I was in university, more than 10 years ago. Instead of cancelling my card, Betz offered this advice. Use your credit card, not like money, but like a different means to pay your way.
“It’s not a credit card,” he says. “It’s a payment card.”
“It’s a convenience tool.”
For me, this idea has been a slippery slope. I’ve started out this way – using my credit card to pay for things and then paying off the balance immediately – many times. Somehow, I always slid. I started justifying purchases for things I didn’t need (clothing, mostly) with money I didn’t have (the credit card company’s, mostly).
The end of my 60-day challenge serendipitously coincided with the day I paid off the final $100 left on my credit card statement. It felt good. Given this fact, right now is the best time for me to start a new relationship with my credit card. One that’s not abusive, but grown up and mature.
PS Need a serious wake up call regarding your borrowing? Watch either Maxed Out (it’s on Netflix or at the CPL) or Debt Trap (available at the CPL). Some of the political information is outdated, but the personal stories are heartbreakingly timeless.