Credit card usage, bankruptcy rise with the prices of food, fuel
10:33 a.m. Monday, July 21, 2008
It's hard to make ends meet these days, so some are living life on plastic. People are using credit cards for basic daily necessities, from fuel to groceries.
"The credit card bills, it's scary to think about how those are going to get taken care of, but its a necessary means to an end," one consumer said.
Gas prices have gone up nearly 40 percent in the last year. In the last three years, a loaf of white bread is up 34 percent, eggs up 68 percent, a gallon of whole milk up 21 percent.
Studies in the past have found people generally cut back on using credit cards during a recession, as they give up luxuries like vacations and dining out.
But this time is different says Professor Todd Zywicki who studies credit card usage.
"This has come on very suddenly, so it's not likely that it's something that people were planning ahead for," Zywicki said. "People might be using credit cards to try to bridge the gap, as it were, and hope that it's a short lived sort of thing."
Some families just are not making it. Personal bankruptcies have increased 30 percent in the first half of this year.
For the first time ever the Federal Reserve has proposed rules on credit cards.
"The Fed has proposed some rules to ban some unfair and deceptive credit card practices, and the rules are surprisingly good, but they are getting a lot of pressure from banks to weaken them," said National Consumer Law Center Spokeswoman Lauren Saunders.
The Fed has an open comment period until August 4 to hear from credit card users with complaints.
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