Making ends meet on a wing, a prayer and a credit card

Credit cards have become the great equalizers between the haves and have nots. Even when they know they can't afford it, people with very little income can get the $399 iPhone, the iPods, the Xbox 360 games and other high-priced gadgets and clothing. Thanks to credit cards and easy credit often marketed to those who can least afford it.

Sadly, many families are also relying more heavily on credit cards for basic living expenses -- buying food, paying the utilities and gassing up the car. The buy-now-and-pay-later mentality shifted from big ticket items like appliances and flat-screen TVs to meat and potatoes.

A growing number of Americans are living beyond their means, says a report released recently by Demos, a non-partisan public policy research and advocacy group. Their new study -- called "Borrowing to make ends meet: The Rapid Growth of Credit Card Debt in America" may explain some of the nation's growing credit card debt over the last decade.

People who don't earn living wages -- enough to feed and house their families -- are now often deep in debt. For many low- and middle-income families, the report says, credit cards are the "safety nets" that help them hold their lives together.

The report looks at credit card debt between 1989 and 2004 in the United States. Among other things, they found:

• 35 percent of households with incomes under $10,000 had credit cards
• More than half of the households with incomes between $10,000 and $24,999 had credit cards
• 46 percent of very low-income families (those earning under $9,999 a year) with credit card debt spent more than 40 percent of their income on credit card payments.

"There's a common misconception that families with credit card debt live beyond their means," said Demos' senior policy analyst Jose Garcia. "But the findings presented here show that credit card debt is a serious and quickly growing problem for millions of families who don't have enough income to cover basic costs of living."
 
The report also notes that rising health care costs for people both with and without health care insurance is contributing the rise in credit card debt. And that problem touches all income groups.