02/10/2010 11:38 am ET | Updated May 25, 2011

Changing Our Dependency on Credit Cards

Prior to 1970 almost all goods were paid for in cash and people were only able to spend what they earned. Since that time, consumption has grown faster than income and we have become a nation addicted to debt. Today, credit cards are used to finance even the most routine daily activities, from coffee breaks to lunch.

With our increased dependence on credit cards, banks have increased their ability to raise revenue from account holders. Even individuals with good credit who pay their balances on time have seen an increase in interest rates and fees. With that in mind, last spring Congress passed the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD). Among its benefits, CARD limits the ability of lenders to raise interest rates on existing and future credit card balances, and mandates notification before any fee changes are assessed. The legislation is also an attempt to end the ability of lenders to target college students on campuses and therefore requires a co-signer if an individual is not over the age of 21.

Many provisions in this bill will go into affect completely at the end of this month, but even then fee income is likely to rise another 5.5 percent. In the next year, 10 percent of credit card debt will be written off by banks because of consumers' inability to pay. Now is clearly the time to reduce our credit card addiction. While fees and high interest rates will continue to be a reality, there are steps an individual can take to prevent falling into the credit card trap.

If you take away one point from this letter, please make it this: we do not need to live our lives by the terms of our credit cards. A credit card is a tool for emergencies, not for morning coffee breaks. Until now, we have been using our credit cards recklessly. As a result, the average household owes $10,678 in credit card debt. Eighty-four percent of college students have credit cards. The average college student carries $4,000 in credit card debt without any means of paying off their growing balances. This is not behavior that can be sustained and it is certainly not behavior that we want the next generation to adopt.

We must lead by example and educate our children to budget, save and give back to the community. I am committed to helping all Chicago residents take control of their financial future. We are reaching into schools with The City Treasurer's Financial Education Initiative for Students and Their Families program to teach children that they have choices with regard to money. They must learn to budget and begin to save money at an early age. My Office also offers free financial planning classes at all of the Chicago Community Colleges. If you want to stop living your life by the terms of your credit card, visit for more resources.