A Year Without Credit Card Debt

On April 27, 2012, I paid off the last of my credit card debt. By doing so, I finally got the guts to tell my family and friends about this blog and all of my original debt. To say I was scared to tell my parents how much debt I had would be an understatement. I remember driving home from work with Mom and testing my story on her first. I could barely look her in the eye, and that’s not just because I was watching the road. I didn’t want to disappoint her, and I couldn’t bear the thought of seeing it on her face. When I finished telling her that I had paid off (at that time) about $15,000 of debt, the first words out of her mouth were, “You need to tell people how you did that, Caitlin!” My reply: “I do, Mom.”

Only, I stopped after that. Ok, that’s not entirely true. I obviously tell you guys where I cut back on spending, so I can pay down the rest of my debt. But I haven’t really talked about how my relationship with my credit card has changed over the last year (and trust me, it has changed). Let’s talk about what happened first.

I Was Scared to Use It

When I first got my credit card down to $0, I was scared to use it. No, I was scared to even look at it. That baby blue piece of plastic was my answer to getting whatever I wanted whenever I wanted it for years. I knew those 16 numbers like my life depended on it – the 3 digits on the back, too – and when I finally paid off my balance in full, I took drastic measures to try to forget it. I took it out of my wallet and put it in my jewelry box. I deleted all of the things I wanted to buy that were saved in my bookmarks folder. I avoided online sites altogether. And I tried to keep coins in my wallet, in case I ever needed to pay for parking (something I swiped for more often than I care to remember).

I Started to Use It

After a couple months, I slowly started to use my card again. I say “slowly” because I only used it when I had to pay for something online, like airfare, and only when I had the cash to pay it off as soon as the transaction went through. I was still too scared to put it back in my wallet, knowing how easy it would be to go back to my old spending habits. Dad encouraged me to get some type of rewards card and start using it like cash but, the truth was, I didn’t trust myself. For seven years, I was an irresponsible credit card user. Sure, I always made my minimum payment. But I don’t think I paid off my balance in full once after I used my first card at the age of 19, so I had no reason to believe I’d be more responsible with it at 27.

I Still Don’t Trust Myself

One year later, I’m happy to say there hasn’t been a single month where I have carried a balance forward on my credit card. In fact, there’s only been a few months where I have gotten a bill at all. Apparently, this has hurt my credit score, but the fact is that I still don’t trust myself.

I have carried a balance on my credit card since I was 19 years old. When I was 22, I remember owing about $3,000. By the time I was 23, that number had jumped to almost $5,000. When I was maxed out, I had a grand total of $6,500 of credit card debt. I could barely make the minimum payment and I was losing sleep over how close to my limit I was. I don’t honestly believe that I’ll ever let my balance get that high again, but I also don’t know how to use a credit card responsibly. My brain has always seen it as a second (somewhat limitless) bank account, not as a tool. I am envious of my friends who can use their cards to build up rewards and still pay off the balance each month; I would love to be able to do that. But I have no experience with that kind of budgeting system. So, until I finish paying off the rest of my debt, I’ll continue to use my baby blue card sparingly.

How do you feel about your credit cards? Have you ever been in my situation?

  • I find getting my credit card statement in the mail kind of funny. It’s outdated by the time it gets to me and 90% of the time the balance it shows has been paid off. The system I use to keep track of my money shows two numbers. How much I actually have in my account and how much I have left to spend.

    • That’s the other thing I hate about credit cards: if you don’t stay on top of it daily, it’s so easy to lose track because it takes so many days to update online.

  • I’ve been spending the last few months paying off a bit of credit card debt (under $500) and it has taught me that I’m really bad at using my credit card like a debit card. It’s just way too easy to lose track of my spending when I’m using a credit card. Because of this, lately I’ve only been using my credit card for online purchases, and leaving it on top of the fridge the rest of the time. That technique works a lot better for me and I don’t have to feel bad about carrying a balance.

  • I hate credit card debt. My wife and I moved home to Newfoundland a few years back and paid off almost 10 grand in credit card debt. I only use my cc for online purchases and only if I have the cash to transfer over right away. Getting in the buy now pay later thing doesn’t work for me.

    • Congrats to you and your wife for paying off that much credit card debt! Sounds like it’s not uncommon for people to steer clear of their cards, after paying them off.

  • Going through the “get out of debt” process has made me nervous about the end of the road and whether I will start to binge on money again. I agree with you, I don’t think I’ll be able to have the discipline to spend and then just pay it off at the end of the month. I’ll definitely have to have all the money saved for something, charge it and pay it off right away.

    • Maybe if we practice that for a few years, one day we’ll be able to pay it off at the end of the month!? Who knows.

  • No Cait, I’ve never been in your situation (re: credit card debt and the emotional baggage associated with it).

    Since university I’ve regularly used a credit card, sometimes more than one, sometimes different types (like a gas card, a store card, a bank card, etc.). That said, however, I’ve always kept an eagle eye on all the balances and tried to regularly pay off each one every month in full. Of course there have been times in the past, like around Christmas time (not so much these days) where I’ve through necessity had to pay some interest by electing to pay off a credit card balance over 2 or 3 months, but never longer than that.

    Over the years, as I became more financially experienced, I began to cut down the number of different credit cards that I used. Things like gas cards and dept store cards I dropped so as to consolidate most, if not all of my regular monthly credit card spending on goods and services all on the one card, a card with gave me yearly cash back rewards. I figured that, since merchants factor in their credit card processing costs into the cost of the things that I was purchasing, I might as well be getting something back in return, hence my cash back credit card usage. Of course, as we know, this take discipline to use intelligently so as to fully pay back all balances in full each month as often as possible.

    The other thing about credit card spending is the “out of sight, out of mind” issue. People often tend to use credit cards unaware of the running balances that they are accumulating until they see that one monthly credit card bill arrive. To address that issue I recommend that people should log online and review their ongoing credit card purchases and outstanding balance more often, daily or weekly, as required. Increasing the visibility of credit card usage might then help people to exercise a tighter control over their decision to charge to their credit card for discretionary spending, as they follow their monthly budgets as closely as possible. Yes, budgeting is the other key factor to the debt solution.

    So, in summary, I see credit card usage as a tool to be used intelligently and wisely whenever spending, not as a way to indiscriminately reward oneself for wants rather than needs. It does have it’s place in building up a good credit history, one which we all need to have, especially when later on we want to make more major purchasing decisions, like a car, furniture, or a house.

    • I log onto all of my online banking accounts almost daily, but it’s still hard to stay on top of credit card purchases. However, it’s frustrating that it takes days for credit card transactions to appear. Anyway, maybe one day I’ll get better at using them in a way that can both give me some type of reward and increase my credit score again.

      • I agree with what you’re saying – why do credit cards take a few days for the transactions to show when debit is instant? I’ve never understood that either. It would make it easier to track that’s for sure!

      • Not that I would encourage anyone with credit debt issues to go and get another card, but mbna actually shows live transactions. Be warned though that things like gas and other things that doing a temp auth will show as $100 transactions until the actual amount is posted a couple of days later

  • Been there, done that. After I paid off my credit card debt (and I was still paying a massive student loan) I was terrified to use my card. It was my financially responsible boyfriend who encouraged me to try using my card for day to day purchases to get some reward points. I kept all my receipts and as soon as I got home, I paid off my balance from the $25 grocery store trip or the $40 gas bill. Now, we use our credit cards for all purchases and pay them off in full every pay period (helps to keep me accountable) and have used our visa points to buy a TV and fund our many home improvement projects (we cash out our points for gift cards and then save the gift cards til we have enough to purchase what we want).

    In the end, you have to do what makes you comfortable. If you don’t feel comfortable using your card, then don’t! :)

  • Hi Cait,

    I was in your situation (actually, still am $4K in debt) and I left my c/c at home all the time. I am horrible at memorizing numbers so I never (thankfully) memorized my c/c numbers. I’m not using my c/c for everyday purchases (I prefer debit) but I do use my c/c regularly (the one that’s paid off) but only if it is a budgeted expense that I have the money to pay for it right away. So, I am scared of going back into debt (as well, I should be), and I don’t think there’s anything wrong with that. If I treated my credit this respectifully in the first place, I would never have gotten into debt in the first place and be in a much better financial situation now.

    Congrats on the 1 year anniversary :)

    • “If I treated my credit this respectifully in the first place, I would never have gotten into debt in the first place.” Can you imagine if we had done that? How different our lives might be… although, then I suppose we wouldn’t be talking today, if we hadn’t.

  • You’ve basically described the exact process I went through as well. I’m still using my credit card, but do I trust myself? Not really. I was terrified of it when I finished paying it off. I’ve had a revolving balance on it for the last little while, but I haven’t paid interest on that balance yet. It’s a nasty cycle to get hauled into, so I’m hoping I can end that soon.

    • Bah! Somehow I knew you’d probably understand where I was coming from, Cassie. I got a bill for $300 one month and nearly had a panic attack. I’m just not ready to become a regular credit card user again…

      • I feel exactly the same way! The last of my debt is on a 0% interest credit card, but having one card paid in full is so strange. Like Cait, I carried a balance for so long, from around 22 to now. I still feel like just pulling out the credit card makes me want to spend more. But I’ve been using it only to buy stuff I was already buying and immediately making the payment online so I don’t double spend the money.

  • Congratulations on paying off your debt!! Kudos to you girl!!
    I feel very much the same as you, not feeling very confident and safe to use it without paying off the balance the moment you charge something on it. I tested my fear with getting a Target card and purchasing a few things and paying down the bill as soon as I know the total. This card has helped me with starting a new pattern of charging items on my card and paying it down as soon as I know the balanced owed. Another great thing is having my account online and having them send me a reminder of my bill due two weeks before the actual due date.
    That is a great thing all cc should have.
    Congrats again on paying down your Debt!!

    • Reminders to make your payments is a great idea! Although I like to pay my bills as soon as I get them, just so I don’t have to worry about them. Thanks for your comment, Vanessa!

  • Like you, I don’t remember ever paying off my credit card balance in full even once, since I got it when I was 19 years old which was a decade ago…Also like you, I was scared to use it at first, then after a few months I slowly started to use it. Now I use my credit card quite often for the cash-back rewards, but I always make sure I have enough money in my bank account to pay it off. This is such a great post Cait! :)

    • Thanks, lady! I’m drawn to the idea of getting a rewards card, but I’m not 100% confident that I can handle it yet. Maybe (hopefully) soon!

  • Incredible. I’ve started using my credit card now and then (it’s a rewards card)… I pay it off every single day. So far, so good…

    • I’m just curious. How many people write your blog? This is not the first comment I have gotten from it, and it’s always a different name!

      • Just me. I’m cursed with a first name for a last name (Vincent) and a dumb name for a first name (Archer), so I comment with either sometimes.

          • Not so sure right now. As you and others have said, it takes days for the purchases and payments to be posted. Some transactions from Friday are still pending! Makes me worry I forgot one or two. I think I’m “Off” credit cards for awhile again.

  • I paid off my last credit card in July 2012. I was scared to use them again, but in January, I got a cash back card from AMEX and now I use it for everything. I pay it off each month and now enjoy the hefty cash back.

    • Nice. See, I want that, Grayson! This post and everyone’s comments make me believe I’ll be able to be a responsible credit card user one day… but I’m still not ready to try it!

  • I think that our credit limit vs. income is ridiculous, though I like credit cards in general. Except for our lowest-interest card, we are planning on drastically knocking down our credit limits when we pay off our balances, and have already done so twice this year.

    • Good idea! They say you shouldn’t cancel your cards (or at least your oldest ones) but lowering your limit is not a bad idea at all.

  • I am 28 and have never had a credit card. I kind of want an airline rewards card, but have gone so long without, not sure if I should start. Congrats on your 1 year anniversary!

    • You should get one to build up credit! I mean, you don’t have to listen to me… but if you can use it responsibly, it’d probably be good for at least that.

  • I use my credit card for everything I can and then pay it off in full at the end of the month. It’s a cashback credit card so come January’s statement I get a nice chunk of money off the balance and my money is sitting in my bank account earning me interest for an extra month as well.
    BUT I also track every single penny that I spend using an app on my phone so I can see at a glance what my real credit card balance is as it would be WAY too easy to lose track if I didn’t and overspend.

    • Well, at least you’re on top of it! I’ve been tracking my spending for so long that I could probably do this… hmm. Maybe by the end of the year I’ll feel ready!

  • I feel the same way with my credit cards! I paid off all of my debt in March 2013 and haven’t been able to use my credit cards for anything. They were the last of my debt and for me I have to fully agree with you, it was just too easy to swipe it. I use cash for fun things, and my debit for groceries and gas, otherwise I won’t use credit for anything. I know I could be earning rewards with my cards, but since I just paid off all that debt I don’t feel they could give me enough rewards to use them again. Besides, having no debt is reward enough!

    • Maybe it’s also because we are so freshly out of debt that our cards seem extra scary? Who knows. Better to be safe than sorry… :P

  • I am working on paying off my credit card and car debt. The card is down to $1,800 and I am so excited to be near the end. I completely stopped using the card when the balance was at nearly $5,000 in 2011. Within the past few weeks I have tried to start using a credit card again, just to test myself. It’s been difficult. There is not nearly as much emotion tied to me swiping my card as there is when I actually use real cash.

    For now, I use the card for work purchases. This helps keep my stupid credit score up and since I have to file expense reports, I know it will be paid in full within a week of the purchase.

    • Using them for business expenses you know you’re going to be reimbursed for is a great way to build up points as well. I know for me I paid almost half my honeymoon in points that I had built up that way.

  • I got my first credit card after school, and after all of my school related debt. Luckily I signed up for it after I had gotten my finances in order, so I have never carried a balance. I actually put MOST of my purchases on it in order to take advantage of the rewards, but only if I know I have that much money in my account. I NEVER put something on my card unless I already have the cash. At the same time, the rewards aren’t usually super great, so it’s not like you’re missing out on anything huge. Stick to what you’re comfortable with. Once you’re out of debt maybe you will change your mind about using one. :)

    • Thanks for sharing your experiences, Gillian! I do think I’ll be more comfortable with the idea of getting/using a rewards card, once I’m out of debt for a while… for now, it still feels too scary; too unknown. But… onward and upward! Have a great weekend! :)

  • I love my CCs, but only because I pay them off every month. I’ve never been in CC debt–the thought is terrifying to me, frankly. :) But because I pay it off and I track how much I put on it, I’m not scared to use it.

    • I hope to be the same way one day, Jenny! Love hearing how successful some people are with this budgeting technique.

  • Cait, I’m so glad you are on this side of the debt! I am like you – I won’t trust myself with a credit card. That is why I cut them up and cancelled them altogether. Restricting myself to only using a debit card, checks (rarely) and cash forces me to pay attention – which eliminates the chance of getting back into credit card debt to zero forever!

    I don’t believe you have this in Canada yet but they should be coming: Debit cards with rewards. We have PerkStreet and SmarterBucks in the States, it should only be a matter of time before the CA market wakes up and sees you standing there screaming for something like that.

    Stay the course! You are awesome!

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