"Fifty years ago, if you wanted to borrow money you put on your suit and tie and explained to a banker why you needed to go into debt," says Allen Rosenthal, a San Francisco bankruptcy attorney. "You had to have a good reason. But now, people go into debt one pizza at a time."

Travis Plunkett, legislative director of the nonprofit Consumer Federation of America, puts it this way: "Debt has gone from something long term to the short term," he says. "It's the difference between a washer and dryer and my weekly groceries."

Credit card companies catalyzed the shift about a decade ago. Two men started the trend: Richard Fairbank and Nigel Morris, former consultants who took over the reins at Capital One, a credit card issuer, decided to personalize plastic. Instead of offering one card at a set rate, they experimented with multiple cards and all kinds of offers. Bonus APRs, balance transfers, "lifestyle cards" imprinted with yachts, sports teams and college logos -- Capital One pioneered all of those ideas. And whenever someone with, say, a Jeep responded to a gold Visa card imprinted with white-capped mountains -- as opposed to a forest scene -- it made a note of it, creating an associative database that formed the basis for more mailings.

	Print story E-mail story

The experiment worked. In 1988, Capital One claimed about $1 billion in credit card receivables; as of last year, its receivables figure topped $8.9 billion.

The growth, of course, didn't go unnoticed. Fearing for their market share, Citibank, Wachovia, MBNA and all the other major issuers started following suit. At the same time, dozens of new issuers entered the market -- Discover, for example -- and the trend toward extended, personalized credit continued. Today, just about anyone who wants a credit card can get one, including teenagers.

The cultural and economic effects of open access are difficult to untangle. There are some benefits. Credit card issuers, for example, claim to be providing a service, extending credit to deserving consumers who might otherwise be refused loans by banks. And in "Credit Card Nation," Manning argues that the democratization of debt gives people the freedom to rebel against perceived injustices.

"As a source of 'bridge loans' during the contraction of the welfare state and reorganization of the U.S. labor market (part-time, temporary full-time, temps), bank credit cards offer opportunities or political 'space' for Americans to challenge the profit-driven forces of structural change that have profoundly traumatized their lives and the future well-being of their children," he writes. "With the impending conclusion of this 'up' business cycle, Americans will increasingly resort to their credit cards for 'political' purposes such as resisting undesirable employment or intolerable household living arrangements."

Michael Banke, who was recently forced to settle his personal and corporate debts in an Oakland, Calif., bankruptcy court, also argues that credit cards can be a valuable asset. "I started my furniture-building business with two credit cards because I wasn't bankable," he says. And over the course of 15 years -- until the business went belly up this spring -- credit cards saved the company at least three times, paying payroll and covering rent until expected checks arrived.

But Banke says that credit cards also led to his downfall -- to bankruptcy, unemployment and the repossession of everything but five old guitars worth $3,000. Essentially, he came to rely too heavily on credit cards; they encouraged what turned out to be unfounded optimism. For example, when business started to dwindle in the early '90s as cheaper furniture from overseas flooded the market, Banke soothed the slide with plastic. And when his landlord refused to let him sublet part of his 36,000-square-foot warehouse in Antioch, Calif., he used his credit cards to keep the lease instead of closing up the shop.

Every time he charged something, there seemed to be more credit applications in his mailbox. Soon, his credit card debts topped $15,000 -- not much in comparison to the $150,000 he owed before filing for bankruptcy, but still more than he could afford to pay.

"They're like an addiction," Banke says. "The first credit card, like your first nickel bag, is practically free. But then you're hooked and the costs keep rising. It's impossible to say no. If you're drowning and someone offers you a life preserver, you'll take it, no matter how much it costs."

The Free Software Project
Read Andrew Leonard's book-in-progress on Linux and open source -- and post your comments.