Credit card debt in 2005

With the deadline for the new bankruptcy law nearing, credit card delinquencies continue at an all time high. U.S. families are finding themselves deeper and deeper in personal debt, and yet they are encouraged to keep on spending to "help the economy." The recent hurricane victims in the southern Gulf states have had to rely on credit card spending and the lenient repayment terms offered by national banks to survive. This has put focus on a frightening reality of American consumer life -- that fully one-third of adult Americans have zero personal savings. Absolute zero.

Compare Balance Transfer Credit CardsIt's no wonder that even the slightest financial pothole can be the tipping point that triggers credit card delinquency, or even personal bankruptcy. And, adding to the problem is out of control spending during peaceful times, with nearly 40 percent of credit card users only making minimum payments each month. Engaging in habitual personal deficit spending is a misguided strategy, as spiraling debt ultimately benefits neither the economy nor the individual. And, it might not be best to look to Washington for any wisdom on the subject. Federal spending, too, has historically been out of control as well.

So, who or what is to blame for this pervasive situation? A culture of spending, mostly, but part of the issue involves messages from the media (which is supported by advertisers, and typically pounds home the "buy more" message in order to keep ad revenues flowing). Add to that urgings from the government to keep on spending to create jobs and help the economy, especially when it comes to recycling tax refunds.

But there will be consequences. At both the personal and federal level, we are in serious need of debt counseling and restructuring. The entire nation, it seems, needs an education on the downside of out of control spending, and we need to start sending messages that saving money is OK, too.

If a business were run like an individual's personal finances (or the like the government's) it would quickly find itself bankrupt and out of business. It is simply an unsustainable situation to live beyond one's means. At least the government has the ability to raise revenues by having taxing authority, but individuals generally must live on a standard wage or salary.

It's important to realize that credit cards are not the problem, however. It is the spending and money management discipline of the people that use them. Credit cards can actually even help a person get out of debt, if used properly. By transferring high interest rate balances onto a new debt consolidation card offering 0 percent or low interest rates, thousands of dollars can be saved a year. And, it's the perfect opportunity to pay off those balances instead of paying interest to the credit card issuer.

Spending may be good for the economy in the near term, but a burden of debt crushes economic growth in the long term. But you can do your part to help the country and yourself -- get the best credit card in terms of interest rates and maybe even find one that rewards you for everyday purchases. And, more importantly, live within your means.

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Updated: 01-23-2018