by Joseph Kenny | 06/15/09

Over the last several decades, the credit card has become a symbol of American capitalism, but the current recession may transform this image and have long-term effect on the way people live.

Fearful of the growing unemployment levels and devalued home prices, many consumers have decided to play it safe by reducing the credit card spending. This of course, has removed the money needed to run the economy and resulted in worsening conditions.

It seems that this situation has also grown more complicated as the U.S. Congress has had to react to complaints against credit card marketing practices. More restrictive regulation and fees have resulted. Financial institutions are voicing worries that such moves will make consumer credit difficult to obtain and more expensive.

What all of this means is that credit cards are a significant part of a larger problem with keeping the American financial system in a viable state by making sure that credit is in ready supply.

The free-spending attitude that was epitomized by rampant credit card is coming to an end largely because of the massive debt that caused the recession in the first place. The state of the economy is transforming the way consumers use their credit cards.

Still, consumers have become reliant on credit cards as a means of lifestyle enhancement that to go without them entirely seems unthinkable. Most will want to credit available when the recession ends and the economy makes a comeback.

James Chessen, chief economist for the American Bankers Association, said as much. "The fundamental desire to buy things today and pay interest for the privilege will remain part of the culture."

Every month the Federal Reserve conducts a survey to ascertain the total amount of revolving debt currently held by consumers. The figure for credit card balances is a whopping 90% of the total.

Figures taken back in September 1988 put revolving debt at $177 billion. Those taken in September 2008 put that number at $977 billion, a more than five-fold increase. Yet, as of October of last year, the amount of revolving debt dropped six months successively.

It may be that the current credit drop will end up being a temporary condition, but there are signs that some aspects may be permanent.