Big Mac, Fries, And Charge It Credit, Once Used Sparingly, Tapped For Everyday Purchases

While most consumers are accustomed to buying homes, cars or clothing on credit, the idea of taking out what amounts to a loan for a burger and fries would have given some people heartburn only a decade ago.

Today, it’s common to make routine purchases with plastic - including groceries, dental visits, cab rides and Big Macs.

Some people even pay their taxes, parking tickets or buy stamps with credit cards.

MasterCard says government transactions and fast-food purchases are two of its fastest-growing markets.

Vendors estimate about 16 percent of all consumer purchases are made with credit cards.

“People are using credit cards in places that they never could before; this is a structural change,” said consumer economist Sandra Shaber. “There is no other industrialized country that has as widespread credit use as the United States.”

Total U.S. consumer debt now exceeds $1 trillion. By contrast, the U.S. savings rate is the lowest of any industrialized country at 4.5 percent.

While credit use is growing in some parts of the world, particularly Asia, many foreign consumers prefer to use debit cards or smart cards - computer chips embedded in plastic that act as repositories of digital cash.

Strict privacy laws also make it harder to market credit cards abroad than in the United States.

Geoffrey Meredith, president of Lifestage Matrix Marketing of Lafayette, Calif., says the widespread availability of consumer loans in this country and changing demographics are largely responsible for America’s indebtedness.

“The people who were coming of age during the 1930s formed an attitude about saving that you don’t go into debt … You don’t know what’s going to happen next. You save for a rainy day,” Meredith said, noting that generation witnessed the 1929 stock crash and suffered through the Great Depression.

“Contrast them to the early Baby Boomers who came of age from 1963 to 1972. The stock market is still going straight up, unemployment is low, the economy is growing. They feel like there’s always going to be something good around the corner so you don’t have to save.

“That was even more prevalent for the group who came right behind them … those who came of age from 1973 to 1984. They were influenced by the oil shock of the period, inflation running at 18 percent. For them, debt made economic sense that became ingrained in them.”

Durant Abernethy, president of the National Foundation for Consumer Credit, also blames the greater acceptance of materialism, particularly among Baby Boomers who now comprise 42 percent of the nation’s population.

“Years ago, people only went into debt for large purchases or made installment payments on appliances at department stores,” said Abernethy, whose group counseled 816,000 individuals last year in 1,100 offices nationwide, nearly five times higher than 10 years ago.

Most people can handle credit responsibly, but some may borrow to compensate for a job loss, medical emergency, divorce, or poor money management.

They could find themselves using credit to supplement their incomes.

“That can get people in big trouble over a period of time,” Abernethy said.