It's been a long time since I took economics in college. Having said that, I've been thinking about credit card debt and its impact on the economy.

As Americans' personal savings rate continues to plummet, consumer debt is on the rise. Hardly surprising when you consider the financial consequences to banks. If you have a savings account, and you're very lucky, you might get 3% interest. Who pays it? The banks! The reason they can pay you 3%, if you're lucky, is they tey can loan out that money at higher interest rates. If your bank issues credit cards, they could charge 19%. What do they do with the difference? Why they pay off their investors, of course.

If everyone stopped spending on their credit cards and started saving, you can bet banks, and their lobbyists, would be getting laws passed requiring us to carry balances on our cards.

My grandmother is almost 90 and has Alzheimer's. In the last few years, she has applied for every credit card offer that came her way. Guess what? She was accepted! When these companies checked her credit, they saw she didn't have a mortgage. (She paid off her home many years ago.) She didn't have a car payment (because the family always bought her cars). All they looked at was her $700 per month Social Security income and said, in their best Austin Powers voice, "Yeah, Baby!"

My mother has taken over my grandmother's finances, and is preparing for the day when we have to put her in a nursing home. She needs to go now, but is adamant that she will stay home. She is having a hard time using $700 to pay for grandmother's medication ($500 a month) and her ten credit cards. The credit card companies would prefer that she charge the medicine and pay them, but that isn't in the cards. So, she's stopped paying the cards. An attorney told her that they were unsecured loans, and all they can do is call you day and night until they write the debt off.

If we assume that many seniors are doing the same thing, taking every card they are offered, and then failing to pay off their debt, it's no wonder we have a new bankruptcy law.