Credit Cards in America

Mar 2, 2010

On February 22, several new laws went into effect in the United States in the attempts to protect consumers from credit card companies. Included among these laws is a rule that credit card statements must include information on how long it will take to pay off the balance when paying the minimum amount each month. I've heard a great deal of talk on the radio about this particular change, mostly to the effect that it should help wake people up to the fact that minimum payments aren't a great idea, at least from the consumer's point of view; the credit card companies love this scenario.

That got me thinking about credit cards in general here in the United States. According to, the average credit card debt for American households in 2008 was $10,769 (for households with a credit card); almost $11,000! It boggles my mind that there are people out there with a running balance that high. My credit card debt is $0, which means someone out there has a debt of nearly $22,000! How does that even happen?

Most people must live well above their means, which makes no sense to me at all. Maybe that's because I've been pretty tight with my money all my life. I remember saving up chore money to buy my first Nintendo system. Every video game purchase was a result of hard work and scrimping and saving on my part. As a kid, I literally kept paper ledgers tracking how much money I was taking in versus how much was going out. Saving just came naturally to me. I paid for every vehicle I've ever owned, I paid for my college education, and I graduated debt free (or nearly so; I had about $1000 in student loans which I immediately paid off once I got a full time job). I'm what the credit card industry calls a "deadbeat." I pay my bill on time, in full, every month. How can I possibly do that? By staying within my means!

I essentially treat my credit card like a debit card: I know how much money I have in my bank account, so I know not to spend more than that. It's not that hard! Online money management tools like only make that process easier. Month to month, I can track where my money is going, and how I'm doing overall.

I'm not sure what the answer to America's credit card debt problem is. At the very least, money management should be taught in school. Growing up, I had plenty of friends who got into trouble with money by purchasing things well outside of what they were capable of. The sad thing is that money management isn't that hard; it simply takes a little bit of self control. Which is something most Americans apparently just don't seem to have.

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