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How Canceling My Credit Cards Changed the Way I See Credit

Creator:

Renée Roden

Published:

February 14, 2024

January 29, 2024

If you're looking for credit card advice, read this article to find out and transform your financial outlook.

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I remember the first time I learned what credit cards could do for you. Two of my friends — one in grad school, one graduating medical school — were going to visit my friend’s family in South Korea. I was invited but couldn’t afford it. I asked my friend with the hot-off-the-presses MD how she was fitting a round-trip ticket to Asia in the budget.

Credit card points, she said. Those three words changed — if not my life — then at least my future travel itineraries.

I had a credit card in my wallet. But mine was a nondescript, unexciting credit card that I’d gained in 2010 along with the Wells Fargo checking and savings account for the new college student. Their brand was practical, not sexy. My mother’s one piece of financial advice was to use the credit card rather than the debit card because it was “more secure,” and off I went into the big wide world without asking any more questions about it.

But missing the opportunity to go to Korea with my friends opened my eyes and my wallet. So, after finishing theology school and spending the summer unemployed and living in my parents’ basement, I signed up for my first (real) credit card to get a discount on plane tickets to my friend’s wedding. Then when I got a job and had to make a cross-country move, I found the credit card to be a helpful catalyst for getting my life started — buying Ikea furniture and so on. From there, I discovered a whole range of activities credit cards could buy. My friend told me to sign up for the Amtrak credit card (which, if you’re a train lover and regular commuter, is worth its weight in gold), and then I got Capital One’s competitor to the Chase Sapphire (the globe-trotting Millennial’s preferred card) because it paid for TSA pre-check, and I rounded it out with a Chase credit card to purchase tickets to Grand Cayman.

And then COVID-19 came rolling through, and I suddenly found myself sitting on three travel credit cards with nowhere to go.

Enter another complication: after journalism graduate school (this is the second grad school, for folks keeping score at home), I decided to freelance. You quickly learn when freelancing that some months are feast, others are famine. Unlike a salaried position, you don’t have regular chunks of cash filling up your bank account in two-week intervals with taxes neatly withheld. Unless you’re a well-established pro, you usually have to live a little leaner.

And yet, I kept doing things I couldn’t afford because my credit cards allowed me to separate spending and cost — which is the whole point of credit cards from the purveyor’s perspective (and the unsurprising reason 56 million Americans have credit card debt). You can consume and the cost of consumption is borne not by Today Renée and her impulses in the moment but by Tomorrow Renée. And that carefree spending of a salaried lifestyle on a freelancer’s budget caused Tomorrow Renée a lot of stress.

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“When every Instagram square, subway ad, and television commercial is telling you to spend, it’s hard not to. It’s hard to use a piece of technology opposite of the way it is intended to be used.”

During this time, I also started dating someone who didn’t have a bank account, much less a credit card: a Catholic Worker who lived and worked at a home that served the homeless and formerly homeless. But, despite “making” a stipend of $20 a week, I noticed he was a lot less stressed than me. Partly because he wasn’t paying New York City rent. Partly because he’s a Gemini and I’m a Scorpio. Mostly because he knew how much money he had — because if it wasn’t in his pocket, he didn’t have it.

My money, on the other hand, solely existed as a number on a screen, and even then I would have to mentally subtract the balances on the credit cards from my bank account balance to know how much money I have. The fact is a physical object is more comprehensible than a digital number. You know what $1,000 feels like in your hand, and you can quickly tell how fast you’re spending it by how much lighter it gets. And if it’s the number you need to pay rent with, then you feel the great relief of having your needs met. But if you spend $20 of that on a dinner out (let’s be honest, these days, dinner out is twice that), then that’s money you no longer have for rent and you’ll have to get more of it.

It’s harder to do that when you’re looking at a bank balance. And it’s much harder to do when it’s a credit card, and there’s a soft (but expensive) cushion for if you can’t pay up in time.

Often, when we’re told to budget as young adults, we’re urged to just exert more self-control. And, surely, I can use more of that. But it’s also hard to swim upstream. When every Instagram square, subway ad, and television commercial is telling you to spend, it’s hard not to. It’s hard to use a piece of technology opposite of the way it is intended to be used. A credit card is designed to get you to spend a lot (think of those promotions that offer you 75,000 rewards points if you spend thousands of dollars in the first three months), and pay it back in increments so that the company can charge you interest.

Despite the undying American tradition of keeping up with the Joneses or Kardashians, living beyond your means is stressful. It may look glamorous, but it’s not fun. As my stress heightened, I realized my credit cards had to go.

So, one by one, I canceled each of them. When I tried to cancel my Delta American Express, the lady on the phone was actually concerned for me — I was giving up a credit limit that was larger than my annual income from the past three years? “Keep this for emergencies, honey,” she told me, downgrading me to a card without a yearly fee. A year ago, my credit dropped significantly after I moved my bank account from Wells Fargo to a small local credit union in Chicago (losing the long-lasting credit line that had gotten me through college).

I am not telling anyone (especially a young college graduate trying to buy a couch) not to get a credit card. After all, credit card points got me to my friend’s wedding, to Barcelona, and a train ride to D.C. to surprise my friend on her birthday. But keep in mind something I learned the hard way: it’s hard to use a tool against the grain of its design. Credit cards were not invented for you to treat everyone to dinner and then reap the airline miles. Credit cards are designed to make you spend more and to make the bank a profit.

In some previous era, there may have been a win-win imagined here: you get a little extra spending power, the bank gets a little interest, and everyone benefits. The problem is that since 1978, executive pay (including at banks) has exploded by 1,322% percent. The banking industry has become increasingly dominated by large shareholder banks concerned with making profits off of customers wherever and however they’re able.

On a deeper, more interior level, credit cards blur the line between “what I want” and “what I need.” The distinction between the two matters: not just for our wallet, but for our mental health, our freedom of spirit, and our general happiness. Needs meet our threshold for well-being. Wants are fun extras — things that bring delight, laughter, surprises, treats. The more we confuse what we want with what we need to be happy, the harder happiness is to achieve.

Credit cards can help you earn good credit, but “good credit” is not just a credit score calculated by paying your student loan bills and your electric bills on time. You can get a line of credit from the guy at the corner store if you don’t have enough to cover your daily cup of coffee. The word “credit” comes from the Latin word “credo,” meaning belief or faith.

Sure, it’s helpful for the titans of the banking industry to know that you’re dependable with money — that could help you get a mortgage on a house or loan to start a business someday.

But what’s more important for me is that my neighbors know that I am faithful and reliable. If I need a cup of sugar, I can ask. If I need $20 — or even $1,000 — I can borrow that money. And they trust that that’s a good investment. They trust that I will pay them back, that I will offer them that same support and generosity should they have a need because we are invested in our community and in one another. Five canceled cards later, I realize that that’s the kind of credit that builds happiness.