It took ten years, but I have finally learned how to use credit cards. In July 2011, I paid off my last card balance, threw a mini celebration, and moved on with my life. Yay! I still have a few cards, but I only use them when it makes sense – as in, when I can pay off the balance in full.
So this morning I decided to buy an iPad mini with my Target card. I have the money already, but I get 5% off ($16.50 in this case) and free shipping with the card, plus a $40 gift card thanks to a promotion they’re doing. I just felt like it made sense to get it cheaper, so to me that’s a justified use of credit. And the charge would have been paid off as soon as it hit my account.
Except when I clicked the button to check out I got an error message. “There was a problem processing your order. Please select a different payment method.” Hmm, must have typed the number in wrong, I thought. So I went back and entered it again. Same thing.
By this point I was kind of pissed off. I haven’t used this card since 2010 but I knew it was still active. I logged into my account and guess what? My available credit has been reduced to $200. Um… My credit is actually much better than it was when I originally applied for the card – what gives? So I called the number on the back of the card and the customer service lady tells me that my limit was cut due to inactivity.
Let’s review: Since I don’t carry a balance anymore, I am no longer allowed to maintain a decent credit limit.
When I finished cursing a system that punishes responsibility, I decided I should probably check the limits on all my other cards. With the exception of TWO of them – the business card that I use all the time for work and the personal card I use to pay bills – all my limits have been sliced to practically nothing in the 16 months since I paid off the last of my CC debt.
Part of me feels like this shouldn’t bother me. After all, I have an emergency fund. Hell, I have a dedicated fund just for Apple products! It’s not like I need credit to buy food or other necessities (knocks on wood). Still, though, there are certain times when I might use credit. For example, if I’m getting paid for a freelance project on Monday and my refrigerator explodes tomorrow, I’m not touching my savings or the balance in my checking account. I’m going to use a card, then pay it off next week. Except I can’t do that as easily now because most of my credit limits are under $500.
The security I’ve built up – knowing I can use credit, rearrange whatever I need to, and pay off the balance in a week or two – is gone. The ability to purchase something and get cash back and/or protection in the event that the item is faulty? Gone. And while it doesn’t truly matter if I pay for something now or later (because I’m going to have to pay for it either way), it messes up my system. Since almost all my income flows through Paypal, I like to pay for things with credit, then transfer the money from Paypal to the appropriate bank account to pay off the balance. Not anymore!
I’ve really tried to emerge from my spending addiction without getting on the “credit is evil” bandwagon. But today, as I debate whether to buy the iPad mini at full price (I’m leaning toward a big fat NO on that one), it’s hard not to get mad. And I know this is a total first world problem, but what if it wasn’t? What if I needed that $315 for something that wasn’t quite an emergency but was important enough that it needed to be taken care of today?
Today’s lesson: Never depend on credit cards. They can be great when you use them correctly, but card issuers don’t like people who do that. If you assume the credit will be there when you need it, you could be setting yourself up for a major catastrophe (or minor annoyance in my case). Just another example of cash being king, as my dad likes to say.
How do you use your credit cards? Have you ever had an unexpected limit decrease after not using a card for awhile?