Credit cards lie in most Americans’ wallets. Multiple studies say that about 7 in 10 Americans have at least one credit card.

However, credit cards can either be essential to your financial life or detrimental to it.

You need one to help build a strong credit history and improve your credit score, but if you slip up, you can rack up debt and get overwhelmed by high interest charges.

Last week, game designer Avery Alder explained just how fragile this balance is through a visual fairy mafia analogy.

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Image credits: lackingceremony

The simplest way to understand a credit card is to think of it as a type of short-term loan. When a person opens a credit card account, their credit card company gives them a set credit limit. This is essentially an amount of money the credit card company allows them to use to make purchases or pay bills. The available credit is reduced as the person charges things to the card. Later, they pay back what they spent from their credit limit to the credit card company.

Image credits: lackingceremony

Image credits: lackingceremony

“The analogy is one that I have been thinking about for months,” Alder told Bored Panda. “Over the past year, I’ve done a lot of work to expand my knowledge of personal finance, how building a credit score works in North America, how lenders often require a history of borrowing (with low but consistent credit utilization), and how the system works to entrap participants.”

She wanted to share that story in a way that friends could relate to because she knows that a lot of that financial literacy is class-protected. “It’s something that middle-class families often know and working-class families often don’t,” Alder said.

“A lot of my friends are young and queer, so explaining ‘imagine there’s a fairy mafia offering you their gold’ might resonate more than a flat explanation of the credit industry.”

Image credits: lackingceremony

An online survey commissioned by NerdWallet and conducted in 2020 by The Harris Poll, asked 2,033 U.S. adults to describe their credit-building journey and how they feel about credit cards and credit card debt in general.

Just over half of Americans (51%) said they think credit cards are helpful while more than a quarter (26%) think they’re dangerous, and close to 1 in 10 (9%) even say they’re “evil.”

A huge majority of Americans (73%) believe having credit card debt is inherently bad. But the amount of debt they say would overwhelm them — or cause them to seek out credit counseling or file for bankruptcy — is different. On average, Americans say a credit card debt of $4,898 would cause them to start feeling overwhelmed.

Image credits: lackingceremony

Image credits: lackingceremony

Alder herself shares a credit card with her partner. “We have multiple bills that auto-pay on it, and add a few additional purchases to it each month. We pay it down to zero every month. We always make sure we’re putting something on it every month but try to never exceed that golden 30% credit utilization. This keeps the fairies pleased with us, and they keep offering us more gold,” she explained.

Image credits: lackingceremony

Image credits: lackingceremony

In the good debt/bad debt binary, credit card debt is often designated as ‘bad debt’ due to high interest costs and an assumption that using a credit card often leads to unnecessary spending.

While student loans pay for education and a mortgage gets you a home — they are often referred to as ‘good debt’ — credit cards can be used for just about anything, including so-called frivolous spending.

Image credits: lackingceremony

Image credits: lackingceremony

Alder, who lives in Canada, in the Sinixt territory of Southeast British Columbia, thinks that credit bloat has become a huge problem in North American economics. “Real wages have stagnated over the past fifty years, while the cost of living has continued to skyrocket. This has created an unsustainable crunch economy in which people are increasingly forced to turn to credit cards and other lending strategies in order to survive,” she said.

“Advertising and popular culture continue to promote a consumer mentality that increases the temptation of living outside one’s means, never accumulating savings, and always putting more on credit. These choices aren’t something I would ever blame on individuals. Wage stagnation, predatory lending, and a consumer-driven culture push people toward these choices. I want to help people develop financial literacy so they can better navigate that trap, but I think the real solution lies in a larger structural overhaul.”

Image credits: lackingceremony

The good thing is that at least in 2020, consumers reduced their credit card debt by 14%. Last year, the average credit card debt was $5,313 (in 2019, it was $6,194).

Experts don’t know what exactly drove Americans’ ability to pay down their credit card debt, but the impact has clearly been reflected in the improvement of the average credit score (despite the overall economic decline, the average FICO Score in the U.S. climbed 1% (seven points) in 2020, reaching a record score of 710).

“Missed payments reported are down, consumer debt levels are decreasing and the significant steps taken by both the government [with] stimulus spending and private sector [with] lender payment accommodations to help consumers affected by COVID-19 are all contributing to this trend in average score,” Tom Quinn, vice president of scores for FICO, said.

In addition to writing the thread on credit cards, Alder often writes threads on Twitter about labor and finance, such as this one about lean staffing. “It’s my goal to help people better understand the forces that govern their lives. I have a degree in Labour Studies and this is one of the ways that I funnel that knowledge.”

When she’s not analyzing the economy, Alder designs tabletop roleplaying games! Her work includes Monsterhearts, The Quiet Year, and Dream Askew. They’re all available at Buried Without Ceremony.

Here’s what people said after reading Avery’s analogy

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