by Joseph Kenny | 11/16/08

With a credit card debt total approaching $1 trillion, it is not surprising that credit cards like the mortgage markets have a considerable role to play in the American economic crisis. While it is true that $961 billion in credit card debt pales in comparison to the $11 trillion mortgage market debt, the enormous credit lines are bearing down on the lenders who authorized them.

It is a fact that Americans have been borrowing more money than they can possibly pay back, and credit card companies have been there supporting the foolish habit every step of the way.

The current financial circumstances of most Americans are not helping the situation at all. Most people are struggling to make ends meet. As the economy continues is tumultuous downturn, more will be have difficulty paying credit card bills. Others may have to borrow money in order to take care of necessary living expenses. More than 2 million more people have added to the unemployment rate in just the last year. Debt begets more debt; there is no end in sight for some people.

The picture is indeed grim from the lender's perspective as well as the potential for consumer defaulting on credit card payment is on the rise. This will mean changes to the way that credit card companies do business-and it will mean changes in consumer policies. Fewer Americans will be able to get cards, as standards will rise to accommodate factors like credit scores and credit history. Card limits will be lower and cardholders may find it harder to get approval.

Consequences for missed payments will be harsher. For example, you may expect interest rate hikes. Those lenders that slash credit limits will also increase rates. There will be immediate effects on your credit score.

The importance of having a strong credit score will grow in importance in the new credit environment. Therefore, more consumers will strain to protect it from damage.

The effects of credit card debt on the economy are also spreading to auto loans and student loan interest rates. The better you score the more you will save on payments and interest.

There are all sorts of factors to consider when examining the role of credit cards play on the state of US economics.