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Credit Cards: America's Next Crisis

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Nov 8, 2008 10:24 am US/Eastern

Credit Cards: America's Next Crisis

Resource: WBZ's Economic Resource Guide

Reporting
Christina Hager
BOSTON (WBZ) ― Analysts are warning the next financial crisis on the horizon will be credit: phase two of the mortgage crisis. The Federal Reserve announced consumer credit increased at a 3.2 percent annual pace in September.

That brings the national consumer debt to a total of $2.59 trillion.

"Credit card companies have already started to cut back on credit limits for individuals," says Steven Dimitriou, a financial advisor with Mayflower Advisors in Boston. "They do not want to give people who maybe only have an income of $30,000 a $30,000 credit limit anymore. In the past, they were more than willing to do that."

He says many who do have credit cards are depending on them more often, which is dangerous habit, as we watch the unemployment rate climb.

"If you lose your job, even for a short period of time, it's not like the bank is going to stop sending those bills," says Dimitriou.

The average American family carries an $8,700 credit card debt. As debt and defaults rise, credit dries up, at a time when Americans need the help more than ever.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

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