Too Much Credit Card Debt? Don't Blame Your Bank

(MoneyWatch)  Credit cards and the banks that issue them are lightening rods for criticism from the very people who use them: consumer groups and the media. And now the government has jumped on the band wagon with the new Credit Card Accountability, Responsibility and Disclosure (CARD) Act, which goes into effect in February 2010. Of course, the U.S. congress passed the CARD Act as a measure to "protect" consumers from the fee-generating schemes employed by greedy credit card issuers aimed at targeting defenseless consumers.

PAHLEESE! I'm not buying it. The United States is home to the most prolific users of plastic in the world. One factoid says it all: there are more credit cards in use by U.S. consumers alone than by the rest of the entire world population!

Here is my take on this: the credit-card-(mis)using public is not well served when banks are singled out as the reason for credit card problems. Neither are folks well served when politicians tell them that they are being victimized by big banks and that banks are the reason for their bloated debt and financial problems. The real losers here are the millions of folks who use credit cards out of "necessity" because they believe they are forced to live on credit to be able to pay for the "necessary" trappings of an "average standard of living." And when folks get into debt up to their eyeballs, they are told they are not to blame. If you think banks credit-card fees are the source of your financial troubles, then you have the mind set of a money LOSER.

Due to the requirements of the CARD Act, many banks are discontinuing over-the-limit fees and opting instead to decline any charge that could exceed the card's limit. While this could be the cause of some embarrassment, that's not enough of a deterrent to keep people from spending more than they can afford.

Avoiding credt card debt is simple: Only use a credit card as a transaction tool, and only use it to buy things you have the cash to pay for in full. Also monitor your card's balance frequently, and never use your card when you're within $500 of your credit limit. If you cannot live by these rules, then reset your lifestyle by cutting back on discretionary expenses (yes, that includes cable TV, cell phones, smoking, drinking, dining out, etc.), and put the budget savings toward paying down your debt and building up your savings. Don't use your credit cards this year until you've taken these crucial steps.