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Americans still in danger of overwhelming debt from credit cards

Although the U.S. economy may seem to be on the road to recovery, there are still signs that Americans do not have enough cash to make ends meet. Consumers in Houston and elsewhere in the country are still heavily dependent upon credit cards to pay for basic living expenses, adding to the nation's overwhelming debt problems. Last year, approximately 40 percent of low- and middle-income households relied on credit cards for expenses such as rent or mortgage payments, groceries, gas, and electricity.

Analysts believe that lack of income increases and rising living costs are forcing U.S. consumers to rely on credit cards to get by each month. This newly revealed data regarding dependence on credit cards illustrates the limitations of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act. The legislation has proven unable to solve the underlying problems of Americans needing to rely on credit cards to survive.

The CARD Act tightened regulations on the credit card industry's ability to raise rates and charge fees. This caused many credit card companies to create stricter requirements for acquiring credit, decreasing the number of new cards issued. Additionally, existing credit cardholders experienced decreased lines of credit. Approximately 39 percent of households have either had their credit cards canceled, credit limits reduced, or had their applications for a credit card denied.

This has caused many households in Houston and other parts of the country to limit their credit card usage. However, the decrease has only been marginal, with many Americans still reliant on credit cards for their living expenses, which leaves them vulnerable to overwhelming debt. Since 2008, low- and middle-income households have reduced their average credit card debt from $9,887 to $7,145 in early 2012.

Source: CNN Money, "Americans still relying on credit cards to get by," Jessica Dickler, May 22, 2012

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