The Truth About Getting In & Out of Credit-Card Debt

By Sarah Bennett-Astesano


If you’re like many people, when you hear “bankruptcy” you immediately think “credit-card debt.” So much media attention has been paid to the phenomenon of American consumer debt that you might not be surprised that the average American household owes roughly $9,000 in credit-card debt, according to many reports.




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    • Amelia Warren Tyagi and Elizabeth Warren, co-authors of All Your Worth and The Two-Income Trap, agree that credit-card debt has a crushing effect on Americans’ financial situation and they document a 6,000 percent – yes, that’s thousand – increase in credit-card debt in a single generation (since 1968).


    Getting Into Debt
    But it’s not overindulgence in frivolous expenditures that have gotten Americans into credit trouble. Much of that credit debt has been accumulated as families with little discretionary income struggle to cope with disaster, Tyagi and Warren contend.

    The blame for Americans’ credit struggles, they say, lies squarely at the feet of lending companies. Deregulation of the lending industry in the 1970s and ’80s meant that mortgage and credit-card companies alike have been able to put into place policies that had a catastrophic result: the most profitable customers are those that are unable to pay, Warren and Tyagi note. So even as fees and interest are piled upon them, these struggling customers are offered more credit.


    Getting Out From Under
    Once you’re under, don’t seek help from a credit-counseling agency, the authors warn.

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