Credit cards are not meant to cause financial trouble, but rather a more convenient way of paying off larger items and for emergencies, but many people have turned to the longer payment terms as a way to get the finer things in life. Many consumers forget that credit cards are essentially loans that need to be repaid, as opposed to being ‘free' money.

What happens is that a consumer will charge items on the card and then receive a bill in the mail. When they decide to make a minimum payment, interest accrues and the next month has a larger balance, even if they don't pay anything more. But the trouble lies in the fact that people continue to buy more and more. As interest accrues, the minimum payment goes up. And that's when trouble starts.

If the cardholder is living beyond their means by using a credit card, they can not pay off the interest rates as well as the balance as quickly as they think that they will and the credit card companies benefit. For example, an eleven dollar grocery store bill on a credit card can take a year to pay off and end up costing about fifty dollars when it's finally paid off. That's an expensive way to eat.

And because so many people in the U.S. can not pay off their credit card bills, their minimum payments get too high for them to handle, so they turn to bankruptcy. In effect, declaring bankruptcy used to mean a cancellation of your debts and a way to start over, but it also negated your credit history and made it harder to get loans in the future to rebuild the financial history.

But then the bankruptcy laws changed and cardholders are now being told to pay off parts of their debt instead of getting that clean slate and fresh start.

The credit card debt in the United States is a recipe for financial disaster. Because so much of the economy relies on the purchase power of consumers, eventually the increase in debt will lead to less ability to pay overall and a crash in the system. With better credit counseling programs and a system to teach people how to manage their finances, the U.S. can dig itself out of this mess.