Obama’s Credit Plan

Consumer credit cards reached 14.26% in February compared to 12.03% in the final quarter of 2008. That increase reflects an additional $200 annual increase in interest payments for the typical American households. Because of tight credit and credit card defaults, interest rates on credit cards may reach 17% by this fall, according to Dennis Moroney, a research director at the TowerGroup, a financial research company.

The recession witnessed a major transformation for consumer buying habits as those able to keep their homes even with under water value began saving more and paying off debt. Even at that, household debt nationally is $13.5 trillion exceeding disposable income by $2.5 trillion, according to the Times story.

“We’ve gotten spoiled by the idea that interest rates will stay in the low single-digits forever,” said Jim Caron, an interest rate strategist with Morgan Stanley. “We’ve also had a generation of consumers and investors get used to low rates.”