Plastic Predicament
Credit-card debt has nearly tripled in the last two decades, leaving many Americans
stuck in a sinkhole of fees and penalties. Who's to blame, irresponsible spenders or
predatory lenders?
WEB EXCLUSIVE
By Jessica Bennett
Newsweek
Aug. 16, 2006 - At the height of their debt, Delilah and Kevin Lewis, of Chattanooga,
Tenn., had filed for bankruptcy twice, were nearly $50,000 deep and were still spending
on more than 25 credit cards. Though their yearly incomes had once totaled more than
$90,000, Delilah was laid off in 1996, the result of a downsizing effort by the local
newspaper where she worked. Not long after, she suffered a stroke—and was hit with
$5,000 in medical fees. "By then, we were just sinking," the 53-year-old says. "I was
working overtime to try to make back all this money, and I had a heart attack at age 45. I
was a young healthy woman, but I was so highly stressed that I just made myself ill."
The Lewis' case is extreme—but it's far from rare. Americans are spending with
plastic at a staggering rate. Consumer credit-card debt has almost tripled over the
last two decades—from $238 billion in 1989 to $800 billion in 2005, according to an
analysis of Federal Reserve Board data by Demos, a national research and consumer
advocacy group. The average American family now owes more than $9,000 in credit
debt, according to Gail Cunningham of the Consumer Credit Counseling Service
(CCCS) of Greater Dallas, a nonprofit financial-management group. And with credit
companies mailing out a record 6 billion credit-card offers last year (according to Mail
Monitor, a market research group), American families are averaging about seven
cards. "It's a picture of America on the edge," says Cunningham.
How did so many families sink into this quagmire? The Lewis' are the first to admit
that their spending habits were, at times, out of control. But there were also
circumstances that were beyond them: Delilah's job loss. Then, the stroke—and the
$300-per-month medicati