Use of Credit Cards

The use of credit cards is much more dangerous than use of checks or cash. Paying with cash is very easy; for knowing how

much money is available and how much can be spent makes it very hard to get into debt. When paying with a check the process

is a bit trickier; the exact balance has to be kept on the account at all time. Knowing what this balance is and continuously

replenishing it can be quite hard. Nevertheless, even with a check consumers can not get into a lot of trouble. If more

money is spent then the shopper has on the current account, the last written check will be rejected and account will be

suspended until the balance is paid off. With credit cards however, every year more and more people get into debt.

According to American Bankers Association (ABA), Americans owe more then $387 billion on their credit cards. This frightening

number, averaging about $3,900 per family, is just as bad for the economy as it is for the consumers. In September of 1995,

for example, The AT&T Universal card charged $15 per month for late fee to people who paid their bills just one day after

the due date. Visa, on the other hand, was charging the penalty feesfor as little as a dollar over the limit, plus an

interest of up to 24.9 percent per year. In the second quarter of 1995, overdue payments as a percentage of outstanding

balance hit 3.267 percent. That is the highest mark since recession of 1991. "The picture is, some consumers are very,

very deeply in debt," says Charles McMillion, chief economist with MBG Information Services. A swipe of the card has become

so natural that many consumers do not realize how much they have charged, nor that it will take them forever to pay that

debt off. Seventy percent of respondents to a recent ABA survey said that it would take them at least two months to pay

off their holiday