When I was 18, I applied for a credit card because I was told that’s how you build credit. “No credit is worse than bad credit” they say. So I applied and received a $500 credit line on the first try! I was ecstatic. I filled up on a tank of gas using my card and the next month they raised it to $1,000 with a “Congrats!” letter. This was excellent news considering that was about the amount I made monthly at my rinky-dink church job while in college. Even though I was an adult and knew everything at a mere 18 years old, my mom always cautioned “Don’t run it up! But don’t pay the whole thing off either. Just keep a “very, very low” balance”. So I did. I was truly careful, I even consulted with a company like the North Shore Advisory Inc to get up to date advice on how to most efficiently build credit and rewards. I was ahead of the curve in responsibility.
Over the next year or so, I made a valiant effort to ‘make smart decisions’ with my $1,000.00 credit line and didn’t use it much at all. Fast forward to age 20 and my car unexpectedly needs new tires. (I am a female and don’t normally give any vehicle the attention it needs. Truth is, it probably needed tires for a while) I put a whopping $700 on the card and the next month, I had a big credit increase –$4,000! Congrats!! Paid off the tires completely and it doubled again…$8,000 with yet another congratulatory letter.
I’m not sharing this credit information because I’m proud. I’m sharing it because I am absolutely appalled. I managed to hold steady at the $8,000 limit for a couple of years but yesterday I logged in to pay my bill and found that my limit had been extended to a colossal (to me!) $11,200. I am 25 years old. I have no business having a line of credit like that. Whether I’m making $25,000 or $100,000 a year, we are talking about AT LEAST 10% of income dedicated to credit card debt. With so many people my age unemployed, a majority of millennials carrying a massive amount of student loan debt and the whole ‘well, we don’t really give a rootie-pa-tootie about personal responsibility”…we are headed down a dark road of personal and economic destruction and everywhere we turn, there is a crutch to put of the debt for just a little while.
Now, I will say, I struggled with this internally because I certainly don’t want younger people to be discriminated against or denied anything because of their age, but there has to be some benchmark for credit. It’s just like the mortgage bubble and the student loan bubble. Not everyone needs a credit card. Not everyone needs the same credit line. Not everyone needs the same perks. In that capacity, the responsibility is on the company. Stricter income-to-debt ratios? Or maybe don’t increase the credit limit unless someone asks? I never once asked for a credit line increase, the company just did it for me. And for goodness sakes…can we please stop rewarding people for spending on someone elses dollar? My credit score went up over 50 points when I took out my student loans.
I don’t want more regulation for private companies who are lending out the credit, but it comes back around when we, as taxpayers, have to bail them out again- not to mention, we don’t know where this ‘loaned’ money is actually coming from. We preach and preach and preach about the national debt and say ‘Americans live off of what they earn, why won’t the government?” but in reality, we’re perpetuating a cycle of transferring debt to different boiling pots that are all about to overflow. Credit cards aren’t sexy and neither is debt. It’s time we start characterizing spending a little differently and stop being so careless.