The Centre for American Progress reports …..

“Americans are worried about debt and believe it is just going to get worse. "The public is more worried about falling into debt, particularly from medical bills, than about being the victim of a terrorist attack or a natural disaster." According to a new poll sponsored by the Center for American Progress, 86 percent "insist the number of Americans having trouble with household debt has gone up in the last five years." Unfortunately, their worries are well-grounded in reality. The average American savings rate in 2005 was negative 0.5 percent, "the lowest since the Great Depression."  As everyday expenses continue to rise, the problem of debt will continue to burden working Americans.

Everyday household expenses are continuing to increase. Everything costs more today and it's harder than ever for the working poor and middle-class to move up. The cost of a college education grew by 24.6 percent between 2001 and 2004. Families are borrowing more and falling further into debt. U.S. employers are scaling back or canceling completely health care coverage for retirees and more than two in five U.S. adults have problems paying medical bills, or have accrued medical debt. The average national gas price has spiked up 11 cents during the last two weeks to at least $3.00 per gallon, the second-highest level in U.S. history. "For the first time on record, families have outstanding debt that is greater than their incomes," according to an American Progress report.

Credit card debt is at record levels. Today, there are 1.5 billion credit cards in circulation in the United States — five for every American man, woman, and child. Credit card debt "has grown to its highest level on record. By 2004, the typical family with credit card debt owed $2,150 (in 2004 dollars), up 62.9 percent since 1989." Low- and moderate-income households have been hit the hardest. "Low-income families owed the equivalent of 9.5 percent of their income on credit cards, while middle-class families owed 5.2 percent, and high-income families owed 2.3 percent."

Payday lending hurts the military and working poor, and pushes them further into debt. Payday lending is another scheme that hits the working poor who rely on costly forms of credit. The Payday lender "offers small-sum (between $200 and $500), high-fee ($15 to $35), short-term loans (generally two weeks) that result in annual percentage rates (APRs) that often equal or exceed 400%." As a result of the high-risk terms, borrowers are often forced to pay "another high fee to roll over the loan for an additional two weeks or take out another loan to pay off the first loan, thereby getting trapped in a costly and often devastating cycle of 'back-to-back' loans." The payday scheme is a national security issue as these lenders target service members, who are often young and financially strapped for cash. A December 2004 New York Times study revealed that 25 percent of military households have used payday lenders and the Department of Defense has listed predatory lending "as one of the top 10 threats to members of the military."”