Zeev's Turnips Patch-No Politics (ZEEV)

[kendallharmon]

"As home loan market tightens, mounting credit card debt could spur new crisis"

It's not just a problem for the working poor, credit counselors say. Many middle- and upper-class households have come to view credit card debt as a reality of modern life.

"The psychology about carrying credit card debt has changed. What used to be a shame is just an additional way to buy stuff, and stuff is the operative word here," said Catherine Williams, vice president of financial literacy at Consumer Credit Counseling Service of Greater Chicago.

Freda Price, a divorced mother of two in Bethlehem, Pa., is trying to get her credit card debt under control. Five years ago, Price had a $49,000 mortgage and no significant credit card balances. But she now is struggling with $100,000 in mortgage and credit card balances because she has refinanced and used the cards to pay for attorneys in a long-running dispute over child custody with her ex-husband.

Price is close to hitting the maximum borrowing limit on her four credit cards, which are consuming about $300 a month in minimum payments. She finds herself charging gas and groceries on the cards, which she doesn't like.

"The sad thing is I never had any of this debt before," she said. "I have to pay the minimum because I can't afford much more."

Price's credit cards also are preventing her from saving for retirement. She is contributing only 1 percent to her 401(k) plan even though her insurance company employer matches up to 3 percent.

"I'm just between a rock and a hard place. I pack my lunch. I get the newspaper at the house. We don't go out to eat. We don't do much of anything," said Price, 51. "I was always very thrifty, but I don't know where else to cut."

http://www.chicagotribune.com/business/chi-sun_crunch0826aug26,0,2958622,print.story