Credit cards have become a cornerstone of the U.S. economy.
"The American consumer has basically been living on inflated income for the past 10 years," said Ondine Irvingof Card Analysis Solutions.
The report card is written in red ink. CBS News business correspondent Anthony Mason reports Americans have an outstanding credit card balance of $775 billion.
Now, the impact of the Great Recession, and sweeping new regulations passed by Congress to protect consumers, are presenting us with a new problem, by radically altering our relationship with the two-inch piece of plastic that powers so much of the U.S. economy.
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Ulzheimer says the new credit card holder's bill of rights, which takes effect today gives borrowers a 21-day grace period to make payments, requires a lender to give 45 days notice before raising your interest rate, and abolishes fees for going over your credit limit.
"Are these rules likely to cost them money," Mason asked.
"The 'Over the Limit fee' restriction will likely cost the credit card industry between 10 and 15 billion dollars," Ulzheimer said.
Banks have already started trying to make up some of that lost revenue by hiking other fees and interest rates. In a new CBS News Poll, nearly 40 percent of borrowers say their rate has gone up in the past few months. The average advertised rate for credit cards a year ago was 11.5 percent. Today, it's 13.5 percent.
David Duncan used his credit cards to help launch his Georgia based candle and fragrance company, Paddywax. But last year, he got a notice from his bank. His interest rate was cut in half, and his interest rate tripled - from 8 percent to 24 percent.
So Duncan has paid off his credit cards completely.
"I've changed my habits," Duncan said.
Dann Adams of Equifax,the Atlanta company that manages 230 million credit files, says Americans have lowered their credit card debt by more than eight percent this past year.
"We're seeing some unbelievable trends that frankly we haven't seen before," Adams said.
At the same time, banks have cut back on credit card offers as delinquency rates have soared during the recession.
"So what we've seen is a 43-percent drop in the number of new account openings for credit cards over the past 12 months," Adams daid.
The truth is, our brains may be hard wired to buy impulsively. For the past decade, Dr. Gregory Berns of Emory University has been using brain scans to study how we make buying decisions. It's a fight he says between the dopamine neurotransmitters in the center of the brain, and the frontal lobes which deal with the future.
When doing brain imaging experiments, Dr. Berns said you often see "kind of a battle being waged between these short term rewards systems and these longer term planning systems."
Berns says our brains are better at processing the present.
"And the degree to which that happens effects our balance sheets when we're pulling out the card and making that decision," Berns said.
Analysts see two possible solutions to our credit card problem. First, the U.S. could move to more of a cash-based system, like the European model - where shoppers rely on debit cards - that draw directly from their bank accounts.
Germany has only 4 million credit cards. In France, debit cards outnumber credit cards by more than two to one.
Second, we need greater competition. Today, just ten companies control 90 percent of the credit card market. But much smaller credit unions often offer much better deals - like "First Community"in Kalamazoo, Michigan.
Six years ago, this credit union sold its credit card program to a bank.
"The members got upset. The rates were escalating," said Ondine Irving.
After the backlash, card consultant Ondine Irving was called in to help "First Community" rebuild the card program.
While the bank charged rates of 12-29 percent, the credit union now offers a starter rate of 8/25 percent - and capped its highest rate at 18 percent. It's also eliminated balance transfer and annual fees.
"Credit Unions can eliminate all that and still make a profit," Ondine said. "If credit unions can do it, the banks should be able to as well. They are just choosing not to."
The recession has forced many Americans to confront a credit card addiction. America's relationship with plastic has to change. We can't afford for it not to.
A postscript: CBS News asked the 5 biggest credit card issuers for interviews for this story. All 5 either turned us down or did not respond to our requests.
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