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Whenever I cite those figures, which are from the latest Survey of Consumer Finances, conducted in 2004, I hear from readers who insist the statistics aren't true. The argument usually goes something like, "Those numbers can't be right because I have a lot of credit card debt, and so do all my friends!"
This, in turn, reminds me of the untreated alcoholic who insists that she drinks like everybody else, not comprehending that her universe of comparison consists solely of the rummies on the adjoining barstools.
Sure, plenty of people have serious problems with debt. That "one in 50 households" figure above represents more than 2 million American homes.
But most people either don't have credit card debt or have relatively small amounts. Plenty of us use plastic responsibly, as a convenience.
If you have big balances, in other words, you're not the norm -- you have a problem that needs to get fixed. Blaming the credit card companies might make you feel better, but it doesn't get you off the hook.
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Not that we can't hold credit card companies responsible for their more egregious practices. Bars and restaurants are, after all, held responsible when they over-serve drunken patrons, and card companies' credit-issuing binge over the past 20 years certainly holds some parallels to that situation.
I've written about some of the worst practices, most recently in "Credit card companies' evil tricks" ("evil" was the headline writer's word choice, by the way; mine was "foul"). I'd particularly like to see two changes:
A return to good old-fashioned usury laws. Back in the day, many states capped how much lenders could charge borrowers. Those so-called usury laws lost their teeth in 1978, thanks to a U.S. Supreme Court decision. A federal cap on credit card interest rates at, say, 10 points over prime (which would total 18.25% as of this writing) would put an end to seriously outrageous interest rates and make issuers a little more careful about screening applicants, since they couldn't charge loan-shark rates to compensate for taking on high-risk clients.
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Video: The cure for the middle class crunchIt's not your imagination, there is a squeeze on the middle class. MSN Money's Liz Pulliam Weston explains how it's possible for anyone to get in the middle class -- and stay there.
Real credit education. The "just say no" approach doesn't work. The ability to get and use credit rationally is an important financial skill in today's world. The prudent, regular and responsible use of credit cards can help build and maintain credit scores, which are used by most mainstream lenders in granting home, auto and business loans. But people need to know that credit card balances should be paid off in full each and every month. And they won't get that message if the schools or other institutions doing the teaching rely on materials prepared by the credit card companies -- as some do.
By the way, if you have credit card debt, the time to take care of it is now. The articles and tools at MSN Money's Manage Debt Decision Center can get you started, and you can get your questions answered on the Ask a Credit Counselor or the Your Money message boards. Knowing that it's you, and not the cards, that got you in trouble is an important first step. Good luck.
Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
Published March 5, 2007
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