James says he was shocked at how widespread the notion has become in America that it's okay to carry debt and to pay only the minimum payments. In addition, these spending behaviors often contribute to higher credit scores, not lower. "We've gotten so far removed from this idea that a good customer and a responsible person was someone who saved money and paid their bills on time and saved to buy things," he says.
While James says that credit card debt is largely an issue of taking personal responsibility for one's finances, the reality for many Americans is that they depend on the safety net that credit cards provide. "Most people feel like they can't get by if there's an emergency, if they lose their job, if they get divorced, if they have a medical situation," James says. "They're reaching for that plastic, and I can't always blame them."
According to James, people who file for bankruptcy often become a target for lenders in the future. He says that this is because many lenders regard as their "best customer" someone who is already conditioned to spend a lot of money and is willing to pay a high price for credit. He recommends you read the fine print on everything before you sign, including credit card applications, mortgage and loan agreements. If you don't understand the language, James says it's crucial to ask someone—perhaps even a lawyer—to explain it to you.