I fell for it. The ‘increase their credit limit so the card holder falls into debt’ credit card trap. It is technically not a trap but felt like it once I realized I was swimming in credit card debt.
I fell into the trap because I did not realize it was being set. The credit card companies would send me an email every couple of months saying that my credit limit was increased on my card. This made me a happy camper because I thought that increasing my limit meant that I was a good card holder. I kept all my card balances under 25% (for the most part) and my payments were always on time. In my mind, an increased limit was a reward for me being such a great card holder.
I figured that if I kept my under 25% rule my credit score would not suffer. Which it did not. My credit score kept climbing steadily but I was falling further into debt. I soon realized that my credit card debt combined was almost $12,000. Utilizing credit is not all about staying under 25% or keeping a high credit score. I definitely was not comfortable with having that much debt. I also did not want to add any more debt, even if my limits did increase.
After realizing that I digged a pretty deep hole for myself, the first thing I did was stop digging. I stopped using my credit cards for day to day purchases. It was difficult at first but I found that keeping cash on me at all times helped. I started leaving my credit cards at home so I would not be tempted to use them. Only using cash helped me keep my spending to a minimum and I was less likely to binge shop. I would only use my credit cards to make one purchase a month and pay at least triple the minimum payment (and more if I could).
I used to use my credit cards for large purchases and then lie to myself and say I would pay half now and half later. Later would never come. So now, if I do not have the money in my bank account to make a large purchase then I do not buy it. Being honest with yourself about what you can afford (and what you actually need) goes a long way when it comes to utilizing a credit card responsibly.
Having credit cards with large limits gave me the illusion of having a bigger budget. I had to realize that at the end of the day I have to pay all this money back. Currently, 2/3 of my debt has been paid off in a year and some change. I hope to finish paying off the rest of my debt within the next year.