Debt Relief USA -- a prominent debt-settlement firm that Clark criticized in the past -- has filed for bankruptcy, according to The Dallas Morning News.

The debt-settlement firms in general will promise to reduce your credit card debt by up to 75% -- if you pay them several thousand dollars upfront. Their strategy is to get you to stop paying your bills! Once you hit 6 months of non-payment, your debt is written off the lender's books; they know they're not likely to ever see their money.

So the debt-settlement firms want to try to scare the lender into negotiation.

But don't waste your money paying upfront fees, Clark says. You can do the negotiation yourself once you hit 6 months of delinquency. Those in the most trouble have the most negotiating power.

You may recall that American Express was sending out letters offering to pay you if you paid off your balance and closed your account. Other lenders took a cue from the program's success and started calling customers with similar offers. People were getting friendly calls from their lenders looking to settle for 60 cents on the dollar or what have you!

So call up your credit card lender, tell them your story and try to work out a deal on your own. There's no need to pay any outfit on TV to do it for you.

The state of Texas is going after debt-settlement outfits that claim they can negotiate your debt down to just pennies on the dollar or wipe it out altogether.

The firms in question include BC Credit Solution, FH Financial Service, Four Peaks Financial Services and DebtORSolution.

"The defendants unlawfully misrepresented and overstated the nature of their services," according to a press release from the Texas attorney general's office.

Most debt-settlement outfits ask their customers for an upfront fee, plus a monthly retainer. Their strategy is to get you to stop paying on your bills; the basic idea is to make the credit card companies so desperate that they'll settle with you. The reality, however, is that you wind up damaging your credit.

The debt-settlement outfits have supposed money-back guarantees, but this is really just a one-way street with you giving them money -- not the other way around.

Is there a kernel of truth somewhere in the claims of the debt-settlement companies? Yes, they may be able to do some negotiating on your behalf, but in the meantime your credit will be trashed.

Here's another gotcha: You'll get a 1099 form for any money that a creditor forgives. It's considered "phantom income" by the IRS.

The level of credit card debt being carried by college students has risen dramatically in the last 5 years, according to a new Sallie Mae study.

For too long, the giant banks handed out credit cards like candy to freshman. In many cases, the schools themselves got kickbacks for every student that signed up.

82% of students now run a balance on high interest cards, according to the latest numbers. That's up about 37% in just 5 years. Even more disturbing, if you go back 5 years you'll see that nearly 70% of students carried no monthly balances. Yet today, only 15% pay in full each month!

The good news here is that the banks won't be allowed to target college students like they have in the past when the new credit card rules go into effect.

Yet it's still incumbent on parents to educate your children about the dangers of credit card debt before they go off to school. If they protest and say you're infringing on their freedom, you should explain that there is no freedom when you owe the credit card companies.

The nation's new credit card rules have caused all kinds of unnecessary overreaction and Clark wants to take a moment to calm some of the hysteria.

There have been "woe is me" articles everywhere speculating wildly about the end of credit as we know it. One headlines even proclaimed, "Credit cards are going back to the '50s, low limits and only for the rich."

Come on, capitalists adjust! The only reason we had these rules in the first place is because things became too unbalanced with "gotchas" hidden in mice type.

The new rules lay down some basic guidelines; they don't mean that banks can't make any money in the credit card market. They simply mean that banks can't continue to retroactively cheat you with low teaser rates, where they get you all charged up and then switch the rate. Nor can they continue the unfair practice of sending around those mailers that advertise a "fixed rate" that isn't really a fixed rate.

But the dire predictions about no credit cards being available in the future are just false. Companies will figure out how to compete for market share under the new rules.

Meanwhile, the idea that banks can impose whatever terms they wish on us is baloney. Credit unions and stock brokerage houses are busting up the banks' stranglehold on the credit card market. We will still have plenty of competition and choice.

So don't fret. It's not like a party has ended. The party is actually just beginning -- the party of more responsible lending and charging is coming.

Meanwhile, "croak and choke" insurance that's intended to protect your family in the event you die with credit card debt is a complete rip, according to The Wall Street Journal.

Their findings suggest that for the price of $5,000 of coverage, you could buy a $250,000 life insurance policy for your heirs. Also, check your statement and make sure you're not being defaulted into a "croak and choke" insurance option, as Clark's mom was!

Have you seen ads being run by the debt-settlement outfits on late-night TV? They promise to reduce your credit card debt to just pennies on the dollar without making you file for bankruptcy.

But that promise is an illusion. Here's the scoop: You usually pay an upfront fee to the debt-settlement firm, plus a monthly retainer. Their strategy is to get you to stop paying on your bills. They typically have you take the money you would have paid on monthly minimums and stash it in a savings account.

The basic idea is to make the credit card companies so desperate that they'll settle with you. The reality, however, is that you just wind up damaging your credit.

In fact, complaints about debt-settlement firms have doubled in North Carolina; tripled in Florida; and quadrupled in Oregon, according to The New York Times.

The reason these companies even exist goes back to 2005 when the bankruptcy laws changed in our nation. At that point, the banks stopped being cooperative with affiliates of the National Foundation for Credit Counseling (NFCC). They were cynically trying to force people into a position where they had no choice other than to pay up. The debt-settlement firms then popped up promising they knew how to defeat the banks.

The irony here is that the banks have now agreed to work with the NFCC again. A newly announced debt-management initiative offers reduced interest rates and the possibility to waive your late fees.

New rules about credit cards passed today in the Senate by a vote of 90-to-5. No longer will this industry be able to completely control your life if you can't pay your balance in full!

Lenders are expected to be required to give 45 days notice before any changes in their terms and conditions. In addition, you'll now have to be late for more than 60 days before they put you into a penalty rate. And they won't be allowed to raise rates on existing balances that you're currently paying.

There are so many positives here. Of course, the Senate bill still has to be reconciled with the House bill and made into a law that President Obama is expected to sign within a week or so.

One provision that Clark hopes survives would be to allow retailers to offer a discount for paying in cash vs. paying with a credit card.

Right now, there's no financial benefit for consumers who want to pay cash upfront -- even though it's cheaper for retailers because they don't have to pay credit-processing fees. So the consumer champ's fingers are crossed on this one! We spent too long encouraging people to spend themselves into oblivion and this would be a refreshing change.

Meanwhile, President Obama today announced new standards for vehicle emissions. In essence, he's adopted California's standards, which has been regulating emissions for years before the feds ever decided to do so.

The new fuel standards call for the average vehicle to get 35 mpg by 2016. Right now, only 7 cars meet that standard…and they're mostly hybrids. The sole gas engine vehicle that makes the cut is the Smartcar, according to The Washington Post.

Will we be able to meet the 2016 deadline? Clark likens Obama's announcement to what JFK did when he told a dispirited nation that we'd be the first to put a man on the moon.

Finally, the penny-pincher believes the new fuel standards represent smart federal policy from a national defense angle. He's in support of anything we can do to reduce our dependence on foreign oil. Why be held over a barrel by nations that want to harm us?

The National Foundation for Credit Counseling has announced its new Call to Action initiative. This 60-month payment plan aims to help consumers who are struggling with credit card debt and may be facing possible bankruptcy.

Under the Call to Action initiative, the 10 largest credit issuers have agreed to modify the terms and conditions of their repayment policies. That means they may waive late and over-the-limit fees, in addition to reducing interest rates.

In general industry terms, this kind of arrangement is known as a debt management plan (DMP).

The goal here is to increase the chance that you'll pay off your debt instead of bankrupting out of it. But the lenders have not agreed to a reduction of your outstanding balance.

Participating credit card issuers include American Express, Bank of America, Capital One, Chase Card Services, Citi, Discover Financial Services, GE Money, HSBC Card Services, U.S. Bank and Wells Fargo Card Services.

Keep in mind that not everyone will be eligible to participate in Call to Action. Visit NFCC.org or call 800-388-2227 for more details to see if you qualify.

We have a new interest rate hike to share with you that tops anything we've previously heard…and you're not going to believe it!

A caller named Jodie sent us his credit card statement to prove an earlier claim about the terrible treatment he's been getting from his Chase MasterCard.

His 20% interest rate was raised to 64.20%!

Clark had been incredulous before actually seeing it with his own eyes. Take a look below if you're still unconvinced.

Interestingly, the consumer champ did not recommend that Jodie close the account. That would only hurt his credit score.

The whole episode reminds Clark of a recent guest editorial about payday lending that he read in a newspaper.

The author was a college professor who was arguing that if you outlawed payday lending, then you might have criminals stepping into the marketplace void and charging interest rates of hundreds of percents themselves.

The penny-pincher, however, see this as faulty logic. If you legalized murder and someone went out and killed another person, they've still killed someone, right?

It's all a matter of perspective when you get down to it. After all, Jodie's 64% credit card interest rate would be a great rate in the world of payday lending.

Americans have changed their spending habits on a dime. Want proof? Clark has a couple of strong examples to share with you.

First, our credit card usage has greatly declined. For the first time ever, the amount purchased on debit cards exceeds the amount purchased on credit cards.

Our collective debt on credit cards is finally under $1 trillion. In fact, it's now $995.7 billion to be exact, according to a recent Federal Reserve report. That's a very positive move.

Of course, Clark has had a longstanding beef with debit cards because they carry very weak protection for consumers versus credit cards. But if using a debit card means that you're spending only what you have, then he's all for it.

Remember, if you live on less than what you make, you reduce the level of anxiety in your life. Do you really want to be that person with the "I owe, I owe, so off to work I go" bumper sticker for the rest of your days?

In another positive example, Americans who thought that Wal-Mart was beneath them are changing their ways too.

The average Wal-Mart customer has a salary of $30,000. But now, the retailer is seeing a surge of new customers with salaries of $50,000. The urge to save has hit us at all income levels. And as a result, sales at Wal-Mart are up because those with salaries of $50,000 spend 40% more than someone who earns $30,000.

President Obama has invited the credit card companies to his office for a strict reprimand about their behavior. Following a perp walk on the White House lawn, the representatives of the giant monster mega-banks that control credit card portfolios all refused to speak to the media.

No surprise there. How can you defend the indefensible?

The big banks lured people in with easy, cheap credit only to get them addicted. They acted no different than a drug dealer.

But changes are coming. The way credit works in the United States will change dramatically. During the last 20 years, you only needed a pulse to get a card. Well, that's over. Say goodbye to the billions upon billions of solicitations the banks routinely mailed out.

You already know that there's a ban on retroactive rate increases going into effect next year.

Clark anticipates other changes will include a tightening of restrictions on the junk fees that go along with credit cards, plus a reining in of teaser intro rates. In addition, the rewards for high-volume chargers are likely to scale back over time.

Will you still be able to get credit? Yes. The most noticeable change is that cards will carry higher interest rates upfront.

But we are moving into an era where using credit will hurt. The time of buying something you can't afford as a lifestyle splurge is coming to an end.

CLARKONOMICS/RIP-OFF ALERT: New data shows that defaults on credit cards have skyrocketed. Just under 9% of balances have been charged off as uncollectable debt as of February, according to Reuters. That's up from 5% last year.

Are you facing a credit card balance that you can't seem to handle? Is it being compounded by a job loss?

You may need to go on food stamps. Food stamps are a necessary social net, unlike the bulk of the $787 billion stimulus package…but that's a discussion for a political talk show!

You'll also need to triage your finances. Paying your car note may be a higher priority than your housing debt. After all, most Americans need a car to go to job interviews. Credit card debt should be the lowest item on your totem pole of financial obligations.

Moody's is predicting the rate of credit-card default will rise from the current 9% to 10.5% in the next year. And therein is the rip-off. If you carry a balance on your card, you'll be punished with higher interest rates to indirectly pay for those who default.

You've probably heard the calls on the show about this. The increases on interest rates tend to be anywhere from 10 to 25 points -- even if you are a good payer. In bankspeak, this is known as the "implementation of yield-enhancing actions."

And there is no limit on how high they can raise your interest rate if you carry a balance. The highest we've heard of is 40%, but 30% is very common too.

So it's more important than ever to trim your budget and throw every last dollar you can at outstanding credit card debt.

CLARKONOMICS: Americans reduced their credit card debt by 10% during the month of February, according to new figures.

The Federal Reserve has been tracking typical credit card balances for 41 years. During that time, the reduction seen in February has only happened once before in the past 4 decades!

People are tired of being held over a barrel by the big banks that operate credit cards. If you owe money, you're putting yourself in danger of some bank jacking up your interest rate overnight.

We're getting calls from people who have had their rate jump from 8% to 30% while they were making timely payments!

Meanwhile, a new piece of legislation going into place next summer will ban such retroactive increases on existing balances you carry. So the cynical "banksters" have responded to that threat by trying to rush in the increases right now.

Another danger people are facing is that their credit line may be reduced or closed in the blink of an eye. That's why Clark recommends that you open additional lines of credit as a form of insurance against possible closures of your existing cards.

When you consider that 30% of a credit score is determined by the amount of available credit that you're using, you can see the importance of the consumer champ's advice. A low credit score could ultimately cost you a job or bring higher insurance rates.

So keep paying down your debt, but also be strategic about how you handle credit. You don't want to get in a situation where you're put in a penalty box even though you consistently make timely payments.

Good news about our spending habits from one of the 3 main credit bureaus. The San Francisco Chronicle reports that new figures from TransUnion show the average American credit card balance only increased by a negligible amount in 2008.

This is the first step to us attacking our debt. Nobody ever got rich paying Visa or MasterCard on a balance to maintain a certain lifestyle.

The only exception to the rule about racking up debt involves entrepreneurs who have to fund a start-up with plastic. For example, they may need to buy equipment to create a return on investment.

That's different than walking into a store with a "gotta have that" mentality. How many "gotta haves" are sitting unused in your closet, basement, attic or storage space?

Clark has 22 to be exact. He recently made a move to donate old slacks to charity and discovered he had 22 pairs of nearly identical khakis hanging in his closet. 22 pairs! Who needs that many? And they were all slight variations on basic beige -- not a single other color in their midst. Ridiculous, as the consumer champ says.

No doubt he saw many of them on sale and just couldn't resist a bargain. Clark is ashamed to admit it, but it's true. We as Americans need to rethink how we spend and consider our needs versus our wants.

Failing businesses all have their excuses about why they're going bankrupt. The sales guys will tell you it's because of the advertising slowdown. The retailers blame the drop in sales. The manufacturers blame the decline in manufacturing. And on and on…

Is that what's really going on?

Well, partly…but the one consistent factor with most every failing company is that they carry a massive amount of debt. There's no wiggle room; anything less than absolutely perfect market conditions can be disastrous if you're over-leveraged.

In the corporate world, a lot of the debt comes about through mergers and acquisitions. You know the drill: Big fish eats little fish, using borrowed dough in the process.

Look at Toyota -- the largest automaker in the world -- as an example. Toyota is losing big money because they took their eye off quality and put it on growth. Now they're in their first year of losses ever since starting in 1937!

Think about how this applies to your own life and finances. Anything -- a job loss, a divorce, an illness -- can put your wallet at risk if you have taken on a lot of debt. Be very careful when deciding to introduce more debt into your budget.

There is great tumult in the credit card market with the rate of defaults climbing to what could be historic highs. As a result, banks are punishing those of us who pay to make up for those of us who are non-payers.

Take JP Morgan Chase as a case in point. Chase has been a recipient of billions of dollars of our bailout money. So how have they turned around and thanked us? By raising rates on fixed-rate cards!

Clark's been hearing from callers who may have had a fixed interest rate at 3.99%, for example, after doing a balance transfer. But Chase is now sending out notifications that in order to keep your fixed rate, you'll now have to pay a $120 annual fee. We're also hearing that payments are jumping from 2% of the balance to 5% of the balance.

This is unsavory and unethical, according to Clark, but it is completely legal under current regulations.

Chase is trying to force you into less favorable terms to make a buck. So what should you do? The consumer champ recommends closing your account, which would allow you to pay off the balance under the old interest rate you and the bank originally agreed upon.

There are new rules coming concerning credit cards that are both a win and a loss for consumers.

First, the good news: The rules will ensure that banks can't retroactively raise the rate on existing balances you carry. They can still, however, do so if you stopping paying, as well as on all future purchases. Meanwhile, the banks will also be required to give 45 days of notice -- up from 15 days -- whenever they want to change your terms.

Now, the not-so-good news: These rules won't go into effect until July 2010! As Clark quips, that gives the banks plenty of time to buy off members of Congress and get these rules overturned!

In related news, CNN reports that Citibank is one of the worst offenders when it comes to what they're calling "rate jacking." Rate jacking is where the banks raise your interest rate even if you pay on time -- simply because you run a balance. So pay those balances off!

CLARKONOMICS: Our Consumer Action Center has been getting tons of calls from people complaining about big run-ups in interest rates on their credit cards and their lines of credit being greatly reduced.

In fact, one call came from a listener who had her interest rate raised to 58%! The old high we'd heard was around 40%.

Of course, this only affects you if you run a balance, which is around 70% of Americans. Banks used to love customers who only made minimum payments every month. But now they're getting very nervous after seeing a trend of minimum payers going into default.

So the banks are punishing everybody. Even if your credit is solid and you pay your balance in full each month, there's a strong chance that your limit will be cut. Incidentally, new stats suggest that only 10% of Americans paid their bill in full every single month during a 12-month period.

A top economist named Meredith Whitney predicts that credit limits will be shrunk globally by $2 trillion over the next year and a half. So follow Clark's advice about dormant cards (aka "back of the wallets") so you're not left without any credit cards to use down the road.

While most credit cards are cutting people's limits, PayPal is moving in the opposite direction and offering a new quasi-credit card. Clark hopes PayPal goes on to become a vigorous 3rd player in the market so they can bust open the Visa/MasterCard cartel.

Meanwhile, the number of people dealing with debt collectors is growing and growing. While many debt collectors do their jobs responsibly, others abuse the law and give the industry a bad name. The bad ones may try to collect money beyond the statue of limitations, which typically is 3-6 years in most states on most kinds of debt.

What should you do if you're confronted by a collector alleging you owe on a "zombie" debt? If you receive the 5-day letter -- so called because it gives you 5 days to respond -- you have a couple of options:

If you don't owe on the debt because it's past the statue of limitations, write them back via certified mail and tell them that. If the debt is still valid but you can't pay, write them back via certified mail and say that. In the latter instance, you can also tell them to stop contacting you further. Under the law, they are required to obey.

The only further contact you should hear from them is if they're suing you over the debt. In fact, one of the worst practices out there is when a debt collector knowingly sues you on an expired debt. If you don't show up in court, they get a default judgment against you -- even though there was no legal way you would have been required to pay.

The number of calls we're receiving from people who are in trouble with credit cards has skyrocketed. Traditionally, Clark advises people about negotiating one-on-one with a creditor; seeking help from NFCC.org; or dealing with a collection agency.

But we're on the cusp of a new way that consumers may soon be dealing with credit card debt. The banks have petitioned federal regulators for permission to offer an immediate 40% write-off to those facing default. The remaining 60% would then be paid off through a 5-year payment plan.

So why do the banks have to seek federal permission to do this? If they just go ahead and reduce your balance, you are taxed on that as imputed income via a 1099 and you have to pay on that. So they asked for a waiver of that rule. In addition, the minute they charge something off of their books, they have their capital standing reduced.

The banks are likely to get permission to do the 40/60 split experiment with a small segment of 50,000 customers. If it is successful, the banks may roll it out nationwide. It's enlightened self-interest on the part of the banks; after all, getting 60% of a debt is better than getting nada.

Please note: The banks haven't gotten permission for this quite yet, so Clark doesn't have details about applying for this program at this point. But he'll let you know as soon as it happens so you can be first in line.

Clark is getting scattered calls from listeners who are outraged or perplexed by the actions of their credit card issuer. The issuing banks are raising interest rates by 20% or more -- even if the individual has good credit, has never been late or hasn't even had any change in their credit standing. This is happening across income levels, affecting even successful business owners and moderate to wealthy individuals.

Fortune confirms that people have seen their rates skyrocket for no reason. The magazine profiled a man named John who had a card that went from 7% to 26% even though nothing changed with his financial standing. Bank of America, Citibank and Capital One are among the issuers who are jacking up rates in the face of a "continually changing business environment" -- which simply means "we're doing it because we can."

The Federal Reserve says that 37% of issuers have increased rates. And get this, Business Week reports that the dollars at risk with people who may not pay is greater in the credit market than in the mortgage market. As the magazine writes, "The consumer debt bomb is already beginning to spray shrapnel throughout the financial markets."

The problem with banks jacking up the rates is that they're making it tougher for someone who might have been able to pay at 5%, but could never pay at 30%. They're shooting themselves in the foot.

Here's the takeaway: The only smart move is to pay your debt down or pay it off. Don't assume you're a sitting duck if your standing is decent; you can shop around for a lower rate offer.

Meanwhile, a special warning: If you're in debt over your head, be wary of those debt negotiation firms that are all over the Internet and late-night TV. They're through and through rip-off artists, according to Clark. Do not believe these lying fools about their ability to negotiate with your credit card company and reduce your outstanding balance by 50% or more. These con artists get you to pay them money as a retainer and then tell you to stop making all payments. But many banks won't even take a phone call from these people anymore because they're on to their game.

So what can you do? Try calling your issuer and telling them you're in over your head. You may get blown off or they may work with you. If you get the cold shoulder, go to NFCC.org and find a local affiliate who can help you to come up with a debt-conquering plan.

One-third of Americans are paying only minimums on their credit cards. At that rate, the average credit card holder with an 18% interest rate will be in debt for 42 years, according to The Los Angeles Times. Can you say 2050? And that's never charging another penny to the card as long as you live!

The interest on credit cards is figured daily. So getting money to them earlier in a billing cycle is to your benefit. If you want to climb out of debt, try making a separate payment every 14 days to the credit card company. This method is proven to get you out of debt at one-fourth the time.

Simply mark your calendar every 14 days and write that check or send your online payment on that day. That will add up to one additional monthly payment a year. Just be sure to work these payments around your statement cycle to avoid paying late fees.

Here's another tip: The banks will try to keep you hooked for decades by lowering your minimum monthly payment as you go along. Don't fall for it! Keep paying the same amount each time -- even if your monthly payment gets drastically lowered.

If you have a little extra money to pay, be sure to put all of it on your credit card with the highest interest rate. Don't simply dole it out among all your credit cards without first considering interest rate differences.

Finally, you can't simultaneously pay on a card and then use it and expect to get out of debt. You've got to ditch the plastic!

Clark has a special warning concerning credit cards for those who travel. American Express -- which has reported lower earnings and a much higher rate of charge-offs -- is using new software that can unexpectedly harm some of its best customers.

According to The Wall Street Journal, AMEX now uses data-mining software to analyze where you use your card and shut off your credit line if they deem it necessary -- based on where you shop. This is even happening to elite customers who carry Platinum cards.

Customers who shop at Wal-Mart or Marshall's, plus those who have a mortgage through Countrywide, are suspect in AMEX's estimation. The company's software tells them that those customers are more likely to default on their accounts -- even if they've never been late in their lives!

This is really just a gross overreaction on AMEX's part. Clark shops at Wal-Mart, so he's expecting his Costco-branded AMEX to be shut off at some point! And furthermore, the logic just doesn't seem to work out here. Would shopping at overpriced high-end stores at the mall then mean you're more likely to pay your bills than shopping at a discount store?

The MBAs must have too much time on their hands, to take discrete pieces of info and make an ironclad determination about you. As always, the forum is open for an AMEX spokesperson to come on the show and refute The Wall Street Journal's report.

The takeaway here is that you should have more than 1 line of credit available at all times, especially if you travel. Who wants to be stuck somewhere and not be able to rent a car or get a hotel room?

Of course, you should only have multiple lines of credit if you know you won't spend yourself into oblivion!

Credit card companies long ago adopted the same tactics as hoodlum drug dealers on the street corner. Pushers may get people hooked on pot, for example, but the real money is in cocaine or meth or what have you. So a drug dealer will give you a free sample of the big-money items to lure you in and create a new revenue stream.

Banks do the exact same thing with credit cards. For years, they deluged your mailbox with debt solicitations. Once you were hooked, they would turn around and raise the interest rates on your existing balances.

But that practice may soon be coming to an end. The House, in a 312-112 bipartisan vote, approved what's being called the "Credit Cardholders Bill of Rights Act" -- and the bankers are squealing like pigs. The bill would halt rate hikes on existing balances. In addition, it would require 45 days of notice if there is to be any interest rate change at all for future balances.

There's another provision of the bill that Clark's particularly pleased about. His American Express bill showed up 4 days before the due date -- fortunately he pays online! Under the bill, banks would have to mail statements 25 days before the due date.

Now the bill goes to the Senate. You just know the banks will be using dirty money to prevent the bill from coming up for vote. The president has indicated he'll veto the bill, but it won't do him any good if it passes both the House and the Senate with a veto-proof majority. That's why the Senate will be a key battleground.

Clark thinks its a rotten game that credit card companies play: They lure you in, get you drunk on plastic with low interest rates, and then once they see you've got a big balance going, they say, "We were just kidding! Your interest rate is now 17%!" Clark has even seen it go as high as 39%. Under current federal regulations, a bank is allowed to raise your interest rates on previous purchases with only 15 days notice. There's been so much uproar about it around the country, that after great delay and much legislation, the Fed and other agencies have issued some proposed rules for the credit card industry. Instead of 15 days notice, you'd get 45. Another new rule is that a bank would be free to raise interest rates on future purchases, but on any balances that already exist, the interest rate you purchased under would apply. The banks are going crazy, because these rules would destroy their ability to cheat you. But that's what Clark thinks the banks are doing, which is nothing short of slimy. When the Fed issued these regulations, they got over 60,000 comments from bank lobbyists--usually they only get a couple hundred at most. The head of the Office of the Controller of Currency even took it upon himself to plead the case for the banks. Clark really wishes he could get him to come on the show so Clark can ask him why he wants to stab the American peope in the back. One of the arguments the Controller makes is that by issuing these rules, there might be less credit made available to the people. Clark says: "As if the American people need more credit!" Spending money we don't have is how we've made our position weaker in the world. If banks can't lend money to people because they can't rip off the customers in the end... so what? That said, it's a free market. If someone says they want to lend money at 35%, that's their right. But if they promise a 7% rate, they shouldn't be able to raise it after the fact. This whole issue has Clark really steamed.

Have you ever used your credit card and been asked for ID or told you'd have to make a minimum purchase? Both stipulations are against the merchant guidelines that govern Visa and MasterCard.

Clark is not upset when he's asked for ID; he sees it as another safeguard, even if it is against the guidelines. However, there is some recourse available if you are peeved.

MasterCard has a simple-to-use form where you can alert them if a merchant required ID or a minimum purchase. Clark has no idea what becomes of this info once you submit it to MasterCard.

Visa, on other hand, has no such procedure in place. So they have a rule, but no enforcement.

The underlying issue here is that we're still using '60-era magnetic strip technology for credit cards. Europe and Asia, meanwhile, are years ahead of us with their smart chip technology. With the smart chip, you're required to enter a secret code to use your credit card. But the banks that issue cards don't want to spend the money to have a safe system on our shores!

Clark has been reading a new book titled High Wire: The Precarious Financial Lives of American Families. Author Peter Gosselin's story dovetails very neatly with Clark's talk of the recent generational shifts that make our current economic slowdown more painful.

It's no secret that there's no longer a "lifetime contract" between employers and employees. We "rent" them and they "rent" us. Gone are the days of pensions after a lifetime of work or the promise of employer-provided healthcare in old age. To complicate matters, people have long since stopped paying cash and now live on borrowed money.

These factors in combination make for an explosive mix that creates financial insecurity. Gosselin talks about being on a wire without a net. Think about your own life: Are you without a net? If so, are you prepared for the consequences that can come if you lose your job?

Here's Clark's advice to get things back on track in your life:

• When it comes to a house, buy with a down-payment. Go for a 30-year fixed rate loan to keep things simple.

• With cars, limit your loans to 42 months or less -- or risk being upside-down in your car.

• Do not use debt for lifestyle; it only creates obligations, not opportunities.

On the other side of the ledger, are you saving? The average American family is spending more than it takes in. But, again, what happens when you lose your job??

College kids are bombarded with an average of 4 phone calls and 5 mailings every month to get them hooked on credit cards, according to a new PIRG study. There's a feeding frenzy because teens are the most profitable of all customers for the banks that issue credit cards. It's unreal to Clark that university presidents and alumni groups are co-conspirators with the banks in trying to demolish the credit standing of our youth. Some cash-hungry universities even make deals with banks to provide them with personal student information and on-campus access to students.

The consequences of this are severe. Clark's senior producer, Kim, ran up $17K of lifestyle debt at college by the time she was 24. She didn't get it all paid off until she was 31. Meanwhile, Citibank and other lenders are being sued in the state of Ohio for handing out coupons for free sandwiches to students. But the catch was students had to apply for a credit card before the coupons could be redeemed. You as a parent have to guide your teens and teach them about the dangers of debt. This should not be a onetime talk; it needs to be an ongoing educational process. Get your own finances in order so you can teach by example.

Many of us have what are called -- in credit card lingo -- "back of the wallets." These are the cards we hardly ever use that may be buried somewhere in our wallets or in a drawer at home.

The typical American has about a dozen cards, but only 2 that are used frequently. The rest of those cards are ignored until they go dormant. In fact, you may not even activate the new card when you get it in the mail.

Banks used to just let these dormant accounts sit and hope you'd someday use the card again -- but not anymore. Now if an account goes stale, they'll close that account. That hurts your credit score and limits your access to funds.

So you may want to consider using your "back of the wallets" twice a year about 6 months apart. Charge a nominal amount and then pay it off. That will keep these accounts current in your credit mix and raise your credit score.

This is not just a silly assignment. You'll be helping your score, which is very important in getting lower interest rates, securing job offers and more.

Payday loans have grown exponentially in states where they're still legal. The Orlando Sentinel recently had a story about a lender who went way beyond what the law permits and charged 1,400% interest!

How can you know a payday lending operation if you see one? Well, they target people who are absolutely desperate for money. They're typically in well-lit storefronts and are staffed by friendly employees who work extended hours to loan money with no questions asked.

It's not unusual for a typical payday loan to have interest rates between 300% and 700%. That's a far cry from the 15% to 20% interest you may be paying on your credit card. The sad thing is that payday lenders aren't required to disclose their interest rates in states where their lobby has bought off legislators.

The military recently got Congress to protect soldiers from the threat of payday lenders; some servicemen and women had their finances demolished and weren't allowed to deploy. Now the rate on loans has been capped at 36% for military and their families. But Clark's heard anecdotally that certain payday lenders are ignoring this and sacrificing patriotism for profit.

Clark had the pleasure of testifying in a state legislative hearing when the payday industry was trying to get its practices legalized. He excused himself to the chairman several times and glared back at the audience, which was packed with payday lenders. Not that they cared. Payday lenders are sociopaths who financially kick you when you're down and don't care about the harm they visit to families.

So it comes back to you to be your own police officer, know the dangers and avoid them. Beware also that many payday lenders have migrated to the Internet.

The nation's banks are reaching new lows when it comes to customer no service. The latest wrinkle took Clark by surprise because he's received scattered calls about this issue without realizing there was a pattern emerging.

Now The Wall Street Journal has discovered that banks are arbitrarily reducing credit limits without telling you. The first you'll hear about it is when your purchase is denied!

Some banks are having up to a 10% default rate on the cards they issue. That's a huge number compared to historical averages. Their panic is so great that they're indiscriminately reducing credit limits -- even sometimes for those who pay their bills in full every month.

The Wall Street Journal also reports that banks are taking a zip code approach to reducing credit limits. This is especially true throughout the real-estate bubble states -- California, Arizona, Nevada or Florida. Again, the banks are frightened because they've seen people go from being current on their bills to declaring bankruptcy practically overnight.

Meanwhile, the banks are also targeting the self-employed because they're frightened of small business bankruptcies. Clark read about one person who had an American Express card that got cut from a credit limit of $36,000 to $4,300!

So if you fit into any of these categories, make sure you're not dependent on any one bank or one credit card. You should have multiple lines from multiple banks. But beware if you miss a payment or are late. Then you've really got a bull's-eye on your back.

If you caught Clark's Good Morning America appearance yesterday, you know that the quick format of TV forced him to speak in sound bites. Today, he wants to expand on his message about what to do in tight economic times.

There's no automatic easy answer. Let's face it, you can't control the price of a barrel of oil or the rising cost of food. So what can you control? Well, just take a look at your monthly bills.

If you have a landline, analyze your phone bill and find out if you're getting the "tariff rate" for your dial tone. Local monopoly phone companies train their employees to sell the "regular" rate, which is actually a heavily marked-up price for dial tone. But in reality, states set the tariff rate, which can be anywhere from $7 to $17. Keep in mind you have to pay junk fees in the $7 to $12 range on top of that.

When it comes to your TV, try reducing your programming package. You may want to go to broadcast basic, which is another regulated rate for cable TV. You'll typically pay between $9 and $14 for about 30 channels. Or you might even want to eliminate your cable/satellite bill altogether and go the rabbit ears route.

Go through your life, bill by bill, and see what you can do to free up more money. Many times, there's something we can cut out without radically changing what makes us happy.

If you're a shopaholic, try shopping without a cart. When you just fill your arms, you're not able to pick up those impulse purchases. Clark himself only shops in stores with concrete floors like the warehouse clubs -- no malls. When it comes to grocery shopping, he suggests that you buy perishables every week and non-perishables every 6 weeks.

Debt has made us feel like things are worse than they are. Clark recently read an article about how our health can be damaged when we constantly worry about debt. But nothing is worth your health. So come up with a plan and tackle your debt.

The Federal Reserve recently released a chart that shows how much debt we carry on loans -- credit cards, car loans and personal loans. As a country, our level of consumer debt has doubled in less than 10 years, adjusted for inflation. The increase began after 9/11 and kept climbing, along with the federal budget deficit.

Today, 70% of us owe balances on credit cards. Not long ago, it was still 60%.

When it comes to cars, some of us could take a cue from Clark's 24-year-old associate producer Joel. He scoured Craigslist and other classifieds for a used car that was in his budget, and he wound up paying $3,200 in cash for a 2000 Nissan Altima. Joel learned early that we don't have to borrow money for transportation. Yet it's anecdotally been said that only 1% of car buyers pay cash!

The truth is we create our debts and obligations. Clark recently saw an illustration in US News and World Report that showed a consumer using a MasterCard shaped like a shark. Next to the consumer was another person walking a dog marked with a dollar sign. The implication is clear: One person has money on a leash, while the other is at the mercy of debt.

We choose to create the debt monster. Nobody held a gun to our head and said, "You must borrow money on a credit card, take a personal loan or buy a car with borrowed money." We choose to do these things with our own free will.

Half of all Americans would rather fess up to their weight than reveal their credit card balance. The amount of debt we're carrying is up 400% in the last 18 years, adjusted for inflation. Credit cards are most often used for lifestyle means. There's nothing wrong with using money to have fun, but you need to be able to pay for the fun.

If you carry credit card debt, Clark wants you to list all your balances and list the interest rates. You'd be amazed at how many people don't know this basic info about their debts. The first step to being healed is to know the problem and attack it. Next, you've got to stop using your credit cards.

When you're readying a plan of attack, there are 2 different philosophies on paying off credit cards. Clark says either is just fine, though he's biased toward the latter.

You can throw most of your money at the smallest balance, while paying minimums on all others. That way you begin to eliminate debts and psychologically gain control. Or you can focus on paying the debt with the highest interest rate first (again, while doing minimums on all others) and then go on to the next highest one. That way you ladder your debt. This second approach is also favored by a lot of personal finance types.

The Federal Reserve is proposing new guidelines for the credit card industry. These are simply proposed regulations; they haven't been finalized yet and may not be until after the November elections. The banks, predictably, are going berserk trying to push back on these proposals.

Here are some highlights of what's being considered:

• Banks would be required to give you a minimum of 21 days to pay a bill. That means statements would have to go out in a timely manner. Banks could no longer pull that funny business of sending out your statement a day or so before it's due.

• Credit card companies would no longer be allowed to raise rates on existing balances.

• Holds would no longer count toward your limit. This tactic is frequently used to force you over your limit. Holds are placed on your account when you use your card at a hotel, car rental counter or gas pump.

• Double-cycle billing -- often used to charge interest on a statement that's already been paid in full -- will be banned.

Keep in mind that these are only proposals. The aim is to make it look like there's a cop on the beat during an election year. These may be changed completely before they become the law of the land.

One thing is certain -- you can expect an uphill battle! Here's an example of the mentality coming from the banks: Capital One was recently investigated by California's state attorney general for its practices concerning customers. The company decided to change its registration from a state bank to a national one during the inquiry. That exempted them from the attorney general's scrutiny and allowed them to turn around and file a counter suit!

So what's the takeaway for you? Seize the power by not carrying a revolving balance on your credit card. Stop accumulating lifestyle debt and the banks will have no power over you.

Financial writer Jonathan Clements recently wrote an interesting piece comparing people to junk bonds. Such a comparison is apt for about 20% of Americans. First, a little background: Junk bonds are typically issued by companies in financial trouble. They carry a high rate of interest because everybody's worried the company won't be able to pay up. So when you're talking about an individual, someone carrying too much debt can be called a walking junk bond.

About 1 in 5 of us carry such high levels of debt that there's a real question if we're good for the money. Have you created a perfect storm by having credit card debt, HELOCs, mortgages, car loans and more? If that sounds like you, recognition is the first step to erasing your junk bond status. Going forward, you have to be sure to buy things cash only and work your debt down, bill by bill. Your goal should be to create financial breathing space in the event of an emergency.

The second principle of Clark's motto is to spend less. The penny-pinching guru's late father used to get upset with him and say he was too tight or too cheap with his money; his thrifty ways drove his dad crazy! Wonder what he'd say to Clark today?!

The reality is that people may be hardwired to handle money a certain way. The action of spending money evokes pleasure in some people and pain in others. This is corroborated by studies done by The University of Pennsylvania and Carnegie Mellon that were recently published in The Journal of Consumer Research. Clark's executive producer Christa recently had an "a ha" moment when reading the studies. She receives pleasure from spending money and is now trying to modify her behavior. Interestingly, Clark feels pain when Christa spends her money because he cares about her and her family. Now Christa wants to re-wired to be more like Clark!

The trick is to understand yourself and then adjust your habits if necessary. Clark admits to having a tendency to unnecessarily deprive himself just to save a buck. So he's had to consciously overcome his aversion to spending and get used to prying open his wallet. Christa, meanwhile, is doing things differently too. She's paying with cash these days so that her budget seems more real to her.

All of this goes to the heart of behavioral economics, a once-maligned field that takes into account human behavior when analyzing one's finances. There's no one right prescription for everybody. You've got to think about your own situation and grade yourself. Then try to adopt some of the other side's behavior.

CLARKONOMICS: Is this the best of financial times or the worst of financial times in the United States? Arguments could easily be made on both sides. Clark wants to share his thoughts amid all the campaign rhetoric you'll be hearing about the economy.

The average American family is living so much better than just a few years ago or a generation ago. Now, before you say this is a trite assessment on Clark's part, hear him out. If you go back 2 generations, nobody had air conditioning or dishwashers -- now they're taken as an article of faith in the modern American home. Clark and his wife recently bought a foreclosure that had 2 dishwashers, 2 laundry rooms and 2 ovens. Meanwhile, the average size of the American home in 1 generation is up 40% (even though family size is shrinking). We have all kinds of electronics at our disposal. We make more than we did a generation ago. The average family income, adjusted for inflation, is up over 20% in a generation.

But the "shop 'til you drop" mentality causes us unnecessary harm and anxiety. A decade ago, the average American bought 33 items of clothing during the year. Today, we buy 48 items, a whopping 50% more. Yes, they're less expensive and semi-disposable thanks to places like Target and Wal-Mart. But the disposable nature of buying and wracking up debt is what has us all bent out of shape. One generation ago, Americans saved 11% of what they made. Now it's 0 or a negative number when they overspend.

We are in the midst of a debt disease that has clutched us with a death-grip. So, yes, overall we're wealthier, but we are pulling the rug out from under ourselves by living above our means and taking on debt. Clark likes to say that we're seizing defeat out of the jaws of victory. So what can you do to make a change? You could buy a smaller home; keep your old car that's been paid off; or look in the closet and see that you don't need to buy any more clothes. You can't do all of these at once, so just pick one and try it out. Christa and her family are actively involved in a consumer cleansing. They're taking better care of what they have instead of accumulating more. Read about all about it in her new blog.

College kids are bombarded with an average of 4 phone calls and 5 mailings every month to get them hooked on credit cards, according to a new PIRG study. There's a feeding frenzy because teens are the most profitable of all customers for the banks that issue credit cards. It's unreal to Clark that university presidents and alumni groups are co-conspirators with the banks in trying to demolish the credit standing of our youth. Some cash-hungry universities even make deals with banks to provide them with personal student information and on-campus access to students.

The consequences of this are severe. Clark's senior producer, Kim, ran up $17K of lifestyle debt at college by the time she was 24. She didn't get it all paid off until she was 31. Meanwhile, Citibank and other lenders are being sued in the state of Ohio for handing out coupons for free sandwiches to students. But the catch was students had to apply for a credit card before the coupons could be redeemed. You as a parent have to guide your teens and teach them about the dangers of debt. This should not be a onetime talk; it needs to be an ongoing educational process. Get your own finances in order so you can teach by example.

CLARKONOMICS: Clark wants you to take control of your financial future. The problem is that our debt level is not allowing us to be captains of our own ships. We no longer actually pay for things; we've become a nation of payment buyers. Many of us seek instant gratification whether or not we have the money for it. Delinquencies are rising on almost every kind of loan. Clark recently saw a Federal Reserve chart depicting the total debt level of consumers. It's doubled in just 10 years -- and that's after being adjusted for inflation and not counting mortgage debt. We as citizens have changed our relationship with money for the worse.

Clark recently did a series on CNN Headline News where he served as a money counselor. Every single person he worked with had excessive debt. That's becoming the normal American story. The only legitimate reason to take on debt is to make more wealth. Mortgage debt used to be considered good debt, but even that's up for debate nowadays. With cars, people are stretching their loans way beyond the old standard of about 36 months.

If it sounds like Clark is haranguing you, well, he is. If you're on the "debt express," get off the train and get onto another one -- the "cash is king" train. The sad thing is that debt is no longer just a uniquely American disease. The international press is reporting all around the world about debt woes. Humans have a tendency to spend money that we don't have. Think about it: People eat more when they're offered larger portions -- it's human nature. It's hard as humans to be our own enforcers, but think about the freedom you can have if you take control of how you handle money. Next time you get a credit card application in the mail, realize that they're not giving you something for free. They're actually conspiring to take away your financial freedom.

RIP-OFF ALERT: Zombie debt is a lucrative and illegal part of the debt-collection world that Clark wants to warn you about. Scavenger collectors buy up expired debts that can be up to 30 years old for as little as 1 penny on the dollar. Then they unleash vicious collectors to try to collect, and frequently violate the Fair Debt Collection Practices Act in the process. They may be going after debts set aside in bankruptcy; stemming from ID theft; or that have passed the statute of limitations, which is typically 4 years on credit card debt. There is no legal way they can collect these debts, but that doesn't stop the scavengers from trying to intimidate you.

This is not a discussion about whether or not you should pay your bills; this is about what your rights are on old debts. The scavengers are so good that they typically collect about 13 cents on every dollar. Many of them also engage in illegal activities by wrongfully putting old debts back on your credit report; harassing you over the phone; or secretly taking money out of your account. If you're being harassed by a zombie debt collector, send them a certified letter stating the debt is invalid and instructing them to stop contacting you. But beware that scavengers don't care if the debt is valid. They've declared war on your wallet and will use any tactics. Be tough and know your rights.

There's a bill in Congress to rein in the giant monster mega-banks and their abuses of the public with credit cards. Credit card bills are often due "net 30," which means 30 days after the date the bill was posted. The credit card companies, which are mostly owned by the giant monster mega-banks, have found that they can generate massive late fees by shortening the amount of time you have to pay. Some companies even have it down to net 15 just so they could post late fees of up to $40! Unless you pay electronically, you can't prove timely payments.

Clark was recently talking to a man in Austin who electronically made a credit card payment the day before it was due. The company received it on time, but waited 48 hours to credit his account. They then charged him a $35 late fee and raised his interest rate 15 points. Clark thinks that's despicable. This industry is missing any morality and doesn't care about treating people properly. The federal regulators, meanwhile, only act as the industry's protector. This new legislation would require you be given 25 days to pay your bill; it's ridiculous this has to be done by Congressional act. The legislation also wants to make it so you get 45 days notice -- instead of the current 15 -- that your rates are going up. Clark thinks they're addressing the wrong problem with that latter measure.

The real problem is that the credit card companies are hoodlums because they agree to make a loan to you, get you hooked and then raise the interest rate on loans you already took out. If Congress wants to help the credit card companies, they should allow them to raise the rates on future charges -- not on amounts that are outstanding. It's been said that people love their credit cards, but hate their credit card companies. This is true with any addiction. Credit card debt as a way of life used to be a uniquely American experience, but the international financial press is reporting the same story around the world. The sad thing is that the banks give so much money to Washington D.C. that Clark doesn't foresee anything changing. So you've got to be responsible for getting your balance paid off. Don't carry a card if you can't control yourself. Also, try carrying a check register to subtract your charges from your savings or checking balance so you know when to stop charging.

There are brand-new stats out about credit card debt that really disturb Clark. It turns out 1 in 9 people can barely make their minimum monthly payment. If the average card holder never uses the card again and pays only the minimum payment, they'll be done in 2043. Clark will be 87 in that year! He doesn't want to have to walk with cane and say, "What was that you said? You finally paid it off?!" Minimum payers are also subject to retroactive interest rate hikes under current law. So that means they can raise the rate on your existing balance from 14 percent to 20 percent or even to 39 percent! Clark has no problem with high rates on future purchases, but he thinks it is dirty pool to raise rates on an existing balance.

What if there was a way to make the minimum payment and get out of debt in a quarter of the time? Fortunately, there is: Say your minimum is $100. Try paying $50 every two weeks instead of $100 once a month. By doing that, you'll make 13 monthly payments in a year. Beware that as the balance comes down, the credit card company will drop the minimum to try to keep you in debt even longer. Don't fall for it!

Clark's Consumer Action Center answers calls off the air 45 hours a week. There's been a shift over the years from calls about cars and houses to…(drum roll, please)…questions about credit and debt. We as Americans are carrying much more household debt than we were in 2000, for example. So it's no surprise that the CAC is getting these kinds of calls. You're taking away your security blanket for the future when you take on tons of debt. The first step is to face up to your debts. Take all your debts, write them down and total them up. After you throw up, you can begin coming up with a plan to deal with the situation. Stop using your credit cards in the interim. You didn't get into debt overnight, so don't expect that you'll be out of it overnight. If you can conquer your debts in 30 months, that's a cycle most people can live with. It's when you go longer than 30 months that things get more difficult. Under those circumstances, you should sit down with the folks at NFCC.org (The National Foundation for Credit Counseling) for free or low-cost advice.

Are you struggling with your bills? Many Americans across the socioeconomic spectrum are having trouble paying all kinds of bills. People often get used to living a certain way and then don't adjust their lifestyle when the money dwindles. Compound that with the threat of a recession and people are really feeling the squeeze. The warning signs are there. It's like being in a coastal community and seeing threatening storms clouds on the horizon. When you think it's going to rain, you prepare by taking an umbrella. So do the same financially. Prepare by getting into a position where you have breathing room. Did you know it's not uncommon for Americans to increase their household debt year after year? People now sometimes think it's quaint and obsolete to pay in cash. But that's the wrong attitude to have. You must work to pay your debt down. Start by not taking on additional debt. For some people it's already too late or very late in the game. Over the years, Clark has always been amazed when he talks to couples about their debt. They often say they're sending in payments, but the balance never seems to go down. Then he discovers that they're still using their cards. That's why the balance isn't going down!

We're living in a time when people are carrying record levels of debt, close to the trillion dollar mark. Per person that's like $1,500 or $1,600, while per household it's several thousand dollars. The Supreme Court ruled that credit card companies could set up shop in states like South Dakota and Delaware where there is no consumer protection. That's been like a free pass for them to do whatever they want. The big fuss right now is over people who pay on time every month and still get hit with giant increases in their interest rates. Clark is not in favor of having fixed rates set by a government cap. But he does think it's reasonable that if you sign up at a certain interest rate, the bank must honor that rate on all existing balances. They should be free to raise the rate on all future purchases, but not on those existing balances.

Clark likens the credit card companies to drug dealers. They want to get you hooked, so they hand out the cards like candy. If you pay down your balance, they'll lower the minimum payment to try to keep you hooked. So it's up to you to control yourself and not abuse that card. Don't charge balances you can't pay. Get yourself on a debt diet. If you have multiple cards, pay as much on the one with the highest rate as possible. Try making a payment every 14 days instead of every month. This works to your benefit because interest is calculated daily. If you keep paying what you've already been paying when they lower your minimum payment, you'll find that steadily more of your dollar will go to the principal instead of the interest. One final thought: This is not like ancient times when people were forcibly enslaved. Today we're making slaves of ourselves with our debt.

Clark has taken about 8 calls over the last several months that he thought were UFO questions with no connection to each other. People have been telling Clark they're getting harassed by collectors over debts that were wiped away when they filed for bankruptcy, or that debts that had been thrown out in bankruptcy court are showing up on credit reports as outstanding. Then Clark read Business Week's recent cover story "Prisoners of Debt" and it all made sense: Certain banks, collection agencies and credit bureaus are working together to undermine existing bankruptcy laws. When you file for Chapter 7, you get a bad mark on your record for 10 years. The tradeoff is that you also get to wipe out any credit card debts clean and clear. You usually first go through an evaluation process to see if you should pay a portion of your debts back under Chapter 13. Today you can only do Chapter 7 if your situation is hopeless.

Business Week discovered that Capital One, Bank of America, Chase and Discover are ignoring these bankruptcy laws -- by accident or on purpose -- and illegally selling debts to collection agencies so they can go after you. This flouts the law of the land, whether you agree with it or not. When a Chase lawyer was questioned by a judge about why they've sold bankrupt debts, the lawyer replied that it happens all the time. The Business Week article says the banks claim this is all an unintentional mistake. But there's a clear pattern here: First the lenders fail to wipe out the debt when you file for bankruptcy. Then they sell it off to collectors and score some cash. Next the collectors try to illegally collect the money. Finally, the credit bureaus act as co-conspirators by listing debts on your report that aren't valid. So if you've filed for bankruptcy and are caught in this vicious circle, contact the banks and bureaus by phone and in writing. Try getting them to update the status of your legally expired debts. If that doesn't work, go back to the bankruptcy court where you filed and talk to the judge.

The banks that issue the bulk of credit cards in our country are seeing more and more problems with delinquency. Their response has been to raise interest rates across the board -- even on people who have not been late on their payments in any way. Sometimes they try to justify the hike by telling you that you've cross defaulted, which means you're penalized for being late on another bank's card. But your bank can also arbitrarily raise your interest rate -- sometimes up to 30 or 33 percent -- on just 15 days notice. So what power do you have? Much of the time, you have the option to suspend charge privileges on a card in return for being able to pay off your balance at the old rate. But if you have other credit lines, vote with your feet by threatening to take your business elsewhere. Try pitting your lenders against each other to get the lowest interest rate.

Several weeks ago, Clark told you that Consumer Reports rated the best and worst credit cards in America. The single best card was the USAA Federal Savings Bank MasterCard, while all cards issued through credit unions came in at No. 2. Meanwhile, the big banks that issue the bulk of cards in America got stinky scores. Now there's a new survey out from J.D. Power and Associates that corroborates the findings of Consumer Reports. The J.D. Power tally focused on the big names only and is topped by American Express and Discover. On the bottom of the heap, J.D. Power says HSBC is the worst, followed by Bank of America and Capital One. That's very similar to what Consumer Reports said in ranking Capital One as the worst followed by Bank of America. Meanwhile, Citibank, Chase, Washington Mutual and Wells Fargo all got lousy scores from J.D. Power even though they came in near the top of the tally. So the important thing to note is that you should get your credit card through a credit union if you have access to it. Don't go through one of the giant monster mega-banks. Size does not equal quality in the world of credit cards.

Many Americans are feeling squeezed financially, according to surveys. So that bodes the question: Do we have an income problem or a spending problem? Do we create our own hazard with finance or do we not have enough opportunity to earn a viable paycheck? Money magazine recently ran a story about how debt has risen so much over just one generation. The story adjusted figures for inflation and found that the average household debt one generation ago was $600. Today it's up to $7,300 -- a 1,200 percent increase. Mortgage debt has risen 50 percent, while the average size of a home has risen 50 percent! Think about that for a moment. Our expectations have grown so much that we're taking on 50 percent higher debt for a 50 percent larger house -- even though the average family size has shrunk. Clark's executive producer, Christa, is among those who have decided to take on more debt to have a larger home with her husband and two children. It used to be that multiple kids would share a bedroom, but today each child gets their own. So we are choosing to take on more debt that people did a generation ago. And it increases the amount of pressure that people feel when they face a job loss or illness. The question Clark wants people to decide for themselves is what is your additional debt worth to you? Is it better to live in a smaller home and have less debt? Only you can answer that.

Clark has long believed that debt is a disease when it becomes your way of life. It can eat at you, lead to anxiety, hurt your confidence and so much more. The New York Post recently ran a story about how members of Generation X (aged 30 to 45) are saddled with debt. Some of their debt stems from educational loans, but even more is attributed to lifestyle debt. Some 33 percent are so deep in debt that they'll never get out. About 20 percent are depressed over the financial obligations stemming from their lifestyle. The irony here is that Gen X got into lifestyle debt because they were doing something that was called "keeping up with the Joneses" back in the 1950s. People want to live large and have all the things their friends have. But the folks who ride in BMWs with the fancy houses may not own -- rather they owe through financing.

If you watch TV during fall season premiere week, look at all the local ads for furniture with no money down or no payment until whenever. It feels like it's free, but it builds a burden in your life. The pleasure of the possession is eclipsed by the burden of the debt. It is the very freedom to borrow today that has created this burden. Past generations like the baby boomers had to put money down to buy their first homes; today you can finance 100 percent. But just because the freedom to borrow and get buried in debt is there, it doesn't mean you have to use it. The Post article quoted a Charles Schwab employee who said that they expected Gen X to be saddled with debt, but they didn't expect them to develop anxiety over it. That's funny, because Clark has been hearing about debt anxiety for 20 years doing the show. As a parting thought, Clark said home is defined by where you are with your family and loved ones. It's not defined by square footage, crown moldings or a huge stainless steel fridge in your kitchen.

Sometimes it seems like young people have a huge bull's eye on their backs for the banks. People who are between the ages of 18 and 24 are being killed with bank overdraft fees. The latest stats say they're paying more than one billion dollars in overdraft fees every year. Clark recently heard from someone who has a teen that overdrew a debit account by $15 and that generated $80 in fees. As a parent, it's getting more and more difficult to teach the young about money. But it must be done. When Clark was in school, you paid for things with cash. Today there's no equivalent in a credit-crazy world. While cash is finite, plastic is infinite. A parent's most important lesson to a son or daughter should involve a pen and a check register -- showing them how to take debit transactions seriously. Banks are only too happy to approve transactions that will result in overdrawn accounts and high fees.

There's a bill in Congress that's trying to make it so that a bank must contact you for approval before they overdraw your account. The banks, predictably, are incensed about this because they may lose profit. Clark loves it when people have more info to make smart (or dumb) choices. What happened to ethics and morality in the banking world? Why do bankers get up in the morning and try to figure out how to rip off fellow Americans? If a bank approves an overdrawn transaction that generates fees, how is that moral or ethical?? It's not. The bill will probably be killed because the bankers are so strong giving dirty money to politicians. So teach your children well and you'll save them from losing money in the school of hard knocks.

Five years ago, Clark's daughter Stephanie was three years old and received a pre-approved offer for a Visa credit card -- what she then called a "Wisa" card. Stephanie loved the fake plastic card that came with the offer and often tried to scan it using her Barbie cash register. At that time she didn't really understand that you have to apply for credit and use it responsibly. Now that Stephanie is eight years old, she's received a solicitation from American Express. She wants to apply and so far Clark hasn't discouraged her. She's going to list her income as zero, her occupation as a student and disclose her true age. Then she'll wait to see if her application gets approved. Clark wonders what he's going to say to her when she's declined. Even worse, he's wondering what to say to her if she gets approved! The credit-card companies are so desperate for customers that there have even been documented cases where they've extended credit to people's dogs. Clark thinks his executive producer Christa should sign up her cat Willow for e-mail lists from merchants and assorted cat-alogs -- pun intended! The whole trend of young people having credit cards is very dangerous in Clark's eyes. One in 10 high-school students has one. But teens should be learning about saving, not spending. It's also important to look at the message about credit that we as parents are giving our children. If you run a balance every month, you need to get your own finances in shape before you try to teach your children by example.

Talk about kicking people when they’re down. Credit card companies are now targeting those in danger of losing their homes because of sub-prime mortgages. Imagine being a homeowner who is in trouble and getting offers for new credit cards in the mail. While you might think you’re getting a lifeline, you’re actually being thrown a cinder block. The Boston Globe reports that the credit card industry has doubled its solicitations to households in sub-prime status. The Consumer Federation of America is angry at the banks for targeting these people. So if you are in trouble and get these solicitations, look at them as a burden -- not a gift. The banks are trying to score money on your hard times. Compounding debt on top of more debt is not a path to wealth -- it’s more like rearranging the deck chairs on the Titanic. So which banks are the worst offenders? HSBC is tops, with its solicitations to sub-prime mortgage holders doubling year over year. Following closely behind is Capital One, with its solicitations up 20 percent; and Washington Mutual, which is up 35 percent.

In today's special edition of Clarkonomics, Clark looked at the increasing trend of credit card delinquency. While you are ethically obliged to pay your credit card debt, Clark thinks more people should start paying off their credit card last when they're facing other bills. Does that sound crazy? Well, think about it like you would triage: You treat whatever is most life-threatening first. Credit card creditors scream the loudest so people tend to pay them off first. But does it make sense to lose your home because you're paying your card instead of your mortgage? No way. So Clark advises people to pay their mortgage first and put the credit card bills on hold if need be. The same applies to your car loan; if you're struggling financially, put it to the side and pay your mortgage first. Then you can resume paying your credit card and car loan when you're back on your feet financially.

Do you remember when gas stations used to offer cheaper prices if you paid cash? Cash discounts at the pump are starting to make a comeback. This might seem like an odd thing, especially considering that people overwhelmingly fuel up using their credit cards nowadays. But the gas stations take a big hit on the credit card processing fees for every charge at the pump. These fees can be anywhere from several cents per gallon to a dime per gallon. So some stations now offer cash-paying customers anywhere from a nickel to 15 cents off per gallon to encourage cash transactions. The Los Angeles Times reports that cash discounts on the West Coast are spreading like wildfire. But this trend also raises a dilemma for stations. If people don't pre-pay via credit card, there's always the risk that they'll fill up and drive off without paying at all. Meanwhile, if you have to pay cash upfront, the stations may have to hire more staff or worry about losing business because of long lines at the pump. There's a balance that has to be struck. QuikTrip is trying to strike that balance by offering a pre-paid cash card. You have to register your personal info at the gas station -- to discourage you from driving off -- and then you're issued a card that lets you fuel up.

It's been several years since the last "Clarkonomics" segment, but today we have another installment for you. This may again become a regular feature on the show since we're in a time of economic uncertainty. Before coming to the studio today, Clark was talking to a man about the stock market. It got him thinking about how what happens on Wall Street affects Main Street America. If you're one of those people with leveraged investments (investments you've made with borrowed money) this is not a good time. You may be getting "margin calls" from the broker who lent you the money. That's when they call you up and basically ask for more dough or they'll sell out your position.

A lot of people are hurting financially; the very rich have gotten burned by hedge funds and those who are struggling to get ahead in the housing market are getting clobbered on their mortgages. Are the rest of us also going to get squeezed soon? There are so many unknowns. But Clark has a standard piece of advice he gives people when the economy is facing tough times: Reduce the amount of debt you carry. Get your life in a position so that regardless of larger economic trends you're not feeling squeezed. Clark himself is now doing something that he hasn't done in 26 years: He's putting cash into a tax-free money market fund. He wants to build reserves because he believes that next year there'll be good opportunities to buy distress real estate.

For the last few years, Clark has trashed Capital One -- one of the nation's largest credit card issuers and the purveyors of those memorable "What's in Your Wallet?" commercials that people either love or hate. Well, today the company gets some praise from Clark because it's agreed to change a policy about how it reports your information to the credit bureaus. In the past, Capital One would not report how much of your credit limit you were using. That way it always looked like you maxed out 100 percent of your credit, effectively destroying your score. According to Clark, this was an intentional move on Capital One's part because they wanted to hurt your credit and prevent other companies from poaching their customers.

Now the company has agreed to report credit limits to the bureaus. So some Capital One customers will have big score boosts and be eligible for better auto insurance rates, homeowner's insurances rates, mortgages and more. Capital One's change is huge because 30 percent of your credit score is based on how much credit debt you're carrying versus how much credit is available to you. So someone who has a card with a $5,000 limit and uses only $1,000 (20 percent usage) has a higher score than someone who has a card with a $20,000 credit limit and uses $15,000 (75 percent usage). Also it's important to know that when you change credit card companies you shouldn't close your old account. You need to keep it open -- even if you don't plan to use the card -- so that you can get a higher credit score.

Did you know there are new requirements for reporting debts or delinquencies? Clark recently had the chance to speak with two experts on the Fair Credit Report Act and the FACT Act (Fair and Accurate Credit Transactions Act). What he learned was illuminating. For example, if you have a credit card debt that went delinquent in January 2000, you might start getting calls from collection agencies in December 2006 -- one month shy of the seven-year expiration limit. What's probably going on is that the collection agency has put a new date on your account. By doing this the agency is breaking the law. If the debt has moved beyond the statue of limitations, you have no legal requirement to pay that creditor anything. Bear in mind that Clark is not talking here about the ethical obligation to pay up -- that goes on forever. He's only talking about your legal obligation.

So what can you do if your debt has passed the statute limit and the collection agency puts a new date on the account just to harass you some more? You can sue them in your own small claims court where you live. They have to come to you and answer for their actions! Just beware that these legal battles can be a two-way street. There are a lot of unsavory characters in the collection business who will try to sue you on expired debts. If you don't show up in court, they get a judgment in their favor when they didn't deserve it in the first place. Meanwhile, Clark also shared some personal anecdotes about working as a bill collector in graduate school, and trying to collect on past debts when he had his travel agencies. To do the latter, he often showed up in person to collect his money! He was always polite and calm. And you know what? It actually worked and he got a lot of money that way.

We are defaulting on our home equity loans more than ever, while simultaneously defaulting less on our credit cards. What's wrong with this picture? Credit card collectors are so aggressive that even if you're one minute late, they're all over you like a cheap suit. They know there's nothing they can really do to you, so instead they use bully psychology to force you into paying up. Contrast that approach with the one taken by your mortgage lender. If you're late on your home payment, they're very non-confrontational. Why? Because they can actually take your house away!!

Human nature dictates that people will pay the person who screams the loudest. But that's the wrong approach. Instead, try thinking about your finances like you would a triage room at a hospital: the doctor sees who has a life-threatening sickness and immediately treats that person. Similarly, it's important to prioritize your monthly bills. Your mortgage should always come first, followed by your transportation bill or car loan -- so you can get to work and keep earning! Try dropping your credit card debt lower on your list of monthly payments. People immediately say, "Well, I'll ruin my credit if I do that." But if you don't have enough money to pay your mortgage, chances are your credit is already being messed up. On a related note, many folks think you can just tell a credit-card collection agency not to call you. Unfortunately there's a special loophole in the Fair Debt Collection Practices Act that the banks got written in. It states that if the collector is an employee of the bank, he or she is exempt from many of the regulations. So they can continue to hound you day and night. If you're getting threatening phone calls where collectors are cussing you out, try taping it. Then bring the tape to your nearest TV station and they'll be more than happy to put the bank on the hot seat.

Roughly 1 in 7 Americans are carrying credit card balances exceeding $25,000. Since the average income is around $50,000 a year, that means that 1 in 7 have a debt amounting to about half their salary. Once you get to that point, you've dug yourself a hole that's pretty hard to get out of. When financial counselors ask people what their debt level is, most don't know, or pretend not to know, because the real figures are just too frightening. And what's troublesome is that not only is the amount of average debt rising, but the number of debtors is rising too. Only 31% are paying off their monthly balance now, down from over 40% not too long ago. So if you're carrying a debt load, Clark is assigning you homework: redefine how you deal with money. Think about the interest you're paying to credit card companies and imagine what else you could do with those funds. Nobody gets rich paying Visa or MasterCard interest. If you are carrying a credit card balance, here's what Clark would like you to do: women, go to your closet of clothes, and guys, head to your closet of "stuff." See how many things there are in there that you bought but don't use. If there's a lot, it could be an indicator of a problem. And while your debt was built up slowly, the answer is quick: cut up your credit cards. if that's too tough of a chore, how about putting the credit cards in a bag of water and freeze them in your freezer...then your credit will be truly frozen! And if you have extra stuff, sell it on ebay or Craigslist, and use it to pay off your balance. It won't make a significant difference, but you will start to heal yourself of the habit of buying things you thought you wanted but didn't really need. He promises you'll feel much better. What if you have a huge debt? You stand a chance to whittle that away if you go on a budget and give yourself a cash allowance each pay period. Contract with yourself to take out only what you'll really need, then stick to it. It will amaze you how much less you spend. Sure, you may have to eat at home or take a sack lunch to work at the end of the pay periods, but so what? Clark wants you to be strong and take hold of your financial future. If you feel burdened by debt, think of the calls he gets from those that got out from under, and how liberated they feel. Be inspired by that. If you still feel overwhelmed, get yourself a credit counselor at nfcc.org. Most affiliates have counselors you can talk to for free. Time's a-wastin', so take control.

If you are late paying your bills it can really hurt your credit score. The amazing thing is that if you have a company credit card, and your company is late in paying the bill, that can affect you too. It can happen through bureaucracy or just plain laziness on their part. If you rely on your employer to pay the bill, monitor the card online to make sure that they aren’t dragging their feet and hurting you in the process.

The Federal Reserve has issued new rules for credit card companies and Clark couldn’t be happier about it. First of all, credit card companies won’t be able to change the terms of your contract in just 15 days. Companies could jack up your interest rate to an ungodly amount and they were only required to tell you 15 days a head of time. Now, they must give you 45 days notice before changing a rate. That gives you time to switch cards or plans if you want. Companies will also have to tell you what kind of penalties you could face if you pay a bill late or makes some other error. You will be informed about what rewards the card offers and it must be written in a way you understand. In addition, when you transfer a balance, companies must tell you how the rates apply on transferred money and remaining balances. Right now, when you make a payment on a card with different rates, the money goes toward the lowest interest rate. From now on, the money will go toward the highest rate. Credit cards are going to fight this until the very end but Clark wants you to know what will probably happen.

Clark has talked in the past about a credit card that helps save money for college. It was offered by Fidelity Investments and it paid 2 percent of all your charge volume into a college savings plan. Well, that program is no longer available to people other than those who already have the card. Now, the company has reduced the benefit to 1.5 percent. And there is now a cap on how much you can earn each year for your child’s education. This is a sign of the times. Credit card companies are reducing benefits and rewards more often these days. Or, for some specific charges, you don’t get rewards. So, it may be time to find a better card. That doesn’t mean you should close the accounts you have. Keeping them open helps your credit score. Just don’t use that card anymore. On another note, Fidelity has a new Visa card that gives you 1.5 percent back into a Fidelity investment account. There is no limit on earning power. Capital One has a card that earns you 1 percent each month, plus an additional. .25 percent at the end of the year. Of course, that could change too. Always keep your options open.

If you have a Capital One card in your wallet, you need to listen up! Capital One uses an analysis program to figure out which customers are near their limit and likely won’t be able to stay under it. The company then sends another card to that person in the hopes that you’ll charge that card beyond the limit. Capital One will keep sending cards to people who are beyond their limit as a way to generate ‘over limit’ fees. These can add up to $350 a month. And the more cards you have, the higher the fees. The Federal Reserve has refused to comment about the practice so far, but it has basically said nothing is wrong with it. If you are with Capital One and you’re getting close to your limit, know that this is not a safety net the company is throwing you. It’s meant to sink you. Turn down the additional cards as soon as you get them.

Clark read in USA Today that families are taking on just under 80 percent in credit card debt these days. That number has gone up over the past 10 years and it means that - over time - people are getting poorer and poorer. Yes, those people will have possessions. But they will have no financial security. The only reason you want to wrack up that much debt is if you are opening or starting your own business. Inflation is not up 80 percent, so there is no way consumers can live comfortably with that much debt. Think before you spend for lifestyle!

You’ve probably heard about the Capital One lawsuits going on. Clark has talked about the system Capital One has to damage your credit. Well, now Capital One has stubbornly refused to modify its position. What happens is Capital One does not report the credit limit on your card. Why? It lowers your credit score and therefore destroys your credit image with other potential credit card companies. So, you’re more likely not to get approved for another card and will continue to use the Capital One card. By not reporting your limit, the credit bureaus guess your limit and that makes you very risky. Now a new lawsuit has been filed against the credit bureaus for reporting erroneous information on our reports. TransUnion, Equifax and Experian have some responsibility here, for sure. But it would be simple if Capital One just behaved itself. Clark has given Capital One the chance to come on air and talk about this, but they haven’t responded. So, you have to decide if you want to be their customer. If you’re currently a customer and you want to stay with them, you should charge a bunch of stuff to the card and pay it off. Then, moving forward, the credit bureaus will see and use that credit limit, sending your score back up. Clark will keep trying to come up with ways to manipulate the system, but for now that’s the only way you can turn the situation around.

Nasty news came out recently about inflation at the consumer level, and it has people concerned. Inflation has knocked about 5 percent off our paychecks in the past year meaning that you’re getting about 95 cents when you got $1 last year. Politicians will, of course, try to blame it on the price of gas. But that is simply not true. Inflation has gone up, and looking back over the year it’s really affected us. So how do we work around that? Well, you raise interest rates and make it tougher for people to spend money. The Feds have to figure out how to weaken demand without throwing us into a recession. And that is really hard to do. So, we’ll see what happens. In the meantime, your main goal should be to pay down debt. Debt is going to be more costly as interest rates move up. So, the more you pay it down, the less you’ll suffer. You must get ahead of the curve on this one. You can’t control what happens on Wall Street, but you can control what happens within the four walls of your home.

You will soon get promotions and ads in the mail from banks about the new “contactless” credit cards now available on the market. These cards allow you to purchase an item simply by passing by the machine. The cards have transmitters that allow the transaction to go through simply by waving the card in the air. No swiping necessary and no signature needed. It’s got people so freaked out about paying for things they don’t want that they are microwaving them. What if you walk by a gas station pump someone else is using and your card gets charged? What about the radio waves that could alert terrorists to which card carriers are Americans and which are not? Or, what about criminals creating a replica of a radio wave in a card and using it to charge all kinds of things. The technology is just too new, in Clark’s opinion. So stay away for now.

Clark tells you how to fight back by getting a high interest bearing savings account. Listen here. Just make sure your pop-up blocker is disabled so you can hear.

Click here to hear Clark talk about the growing debt bubble around the world. Remember that you must disable your pop-up blocker to hear the segment.

About a third of people are paying only the minimums on their credit cards. Even with the new revisions of minimum payment rules, it still takes a lot of time to get out of debt. And the method can be quite confusing. That’s why Clark recommends that you use what’s known as the “Eisenson method.” With this method, you can pay off a debt in a quarter of the time. Basically, you get your statement with the monthly payment due showing at the top. The first thing you have to do is stop using your card. Put it in water in the freezer if you have to, but do not keep using the card. Then, you send in $100 initially and set up an automatic payment plan to pay $50 every 14 days. That doesn’t mean every two weeks; it means every 14 days. Why? There are 52 weeks in a year, not 48. So, there are two extra payments. The idea is to send in two payments every billing cycle. And if you do that, you will be out of debt in one-fourth of the time it would normally take.

Clark gets asked a lot about which credit cards and ATM cards are okay to use overseas. Well, Bankrate.com has done some great research into this topic, and the absolute best company to use is Capital one. Capital One charges no fees right now when you use your credit card overseas. Two companies allow you to use your ATM for free – Citibank and HSBC. But most companies charge an arm and a leg when really it costs them nothing at all. Get the complete list of fees here.

The latest trend in the credit card industry is to offer cards with no late fees. Credit card companies have done surveys and learned that people despise late fees. So more cards are sending out solicitations that scream, “No Late Fees.” Sounds great, right? What these people don’t realize is that instead of charging you late fees the companies are hitting people with punitive interest rates. So, you will immediately see your interest rate jump from 13 or 14 percent to about 30 or even 40 percent in some cases. Economists have worked the numbers and found out that you’d be better off paying the late fee. What’s worse about these programs is that you are automatically reported to the credit bureaus if you miss a payment. So, when you see one of these offers in the mail, toss it immediately!

Americans are the first people ever who save just so we can spend. When we see a “SALE” sign we feel compelled to buy, and we end up in the poor house. But American Express has a new credit card that saves money for people as they spend. When you use the card, you get 1 percent cash back and that money is automatically put into a savings account the earns 3 percent interest. So, if you spend $100, $1 goes into savings and starts earning interest. It’s called “The One,” and it’s geared toward young people. The idea is that people who’ve grown up in a spending culture will learn the value of saving. There is a $35 annual fee, which Clark isn’t that thrilled about. But it’s a good start. Another good deal is the Costco cash rewards card from American Express. You’re given a voucher for spending in Costco, but you can also cash it if you want.

The average American family has increased its debt by 16 percent over the past four years, according to the Federal Reserve. Average household debt has skyrocketed since the turn of the century. Are you in that group? Our debts are going much higher than our overall incomes. Highly paid mechanics, for example, have been filing for bankruptcy with great frequency. Their hours have been cut back and there is no overtime, so they could no longer live the lifestyle they were used to. So, think about temptation when you walk into stores. The whole idea is to get you on the hook to owe money. Gain control by controlling your spending.

Clark talked today about a confusing credit card offer from Chase Bank that claims to offer 0 percent fixed APR until December 2006. Upon further review, however, the mice type on the offer says Chase can change the rate at any time. A reporter from the San Francisco Chronicle got involved and asked Chase to comment on the offer. That didn’t work so Clark is giving Chase the same offer. He’d like to know more about this. In the meantime, though, remember that you have to read the fine print on these offers. If you see one unbelievable offer in bold, you need to be skeptical and investigate further. Otherwise, you could get taken.

If you’ve been making only minimum payments on your credit cards, things are about to change for you. Under an administrative direct from federal regulators, banks now have to charge you more of your balance each month. Banks have always wanted you to have some debt on your credit cards. But the Feds have decided that is creating instability in the economy. So, if you’ve been living on fumes and have been unable to make the minimums, you may be in for a shock. But if you can make those higher minimums, you are going to get out of debt a lot sooner. Right now, you would remain in debt up to 45 years if you make only minimum payments on your cards. That’s without charging anything new on the card. Under the new, higher guidelines, you’ll be out of debt in 2013. You have to stop using your cards of course, and you need to stay afloat on your home and car payments first. But this is a good thing for people with credit card debt in the long run.

A reporter from the Detroit Free Press recently wrote about someone stealing his identity after raiding his mailbox. The criminal used the credit card company checks that are sent in the mail and trigger cash advances. If they’re stolen and passed by someone, the first you know of it is when it appears on your credit card statement. The thieves used the checks to steal $7,000 on his Chase credit cards. The reporter’s neighbor, who had a Citibank card, also had money stolen to the tune of $32,000. Both men now have to do affidavits of fraud. Eventually, the transactions will be reversed and no money will leave their hands. That is the good news. Because these are credit cards, nothing will happen if they dispute it in time. Contrast that story with one about PayPal, and the troubles it has had with duplicated withdrawals. PayPal is inadvertently deducting charges twice and sometimes more often when people use a debit card. In one case, it happened more than 20 times. It’s okay to use a debit card for small every day transactions, but never use one for major purchases.

Cell phone companies are clamoring to become credit card processors. That means your cell phone itself will become a form a payment. Basically, you enter a command on your phone and it automatically pays for things. It’s very popular right now in other countries. Other gadgets are being used, as well. Men are using money clips, and women can use a watch or other piece of jewelry, for example. Think about a watch with a credit card inside. It’s right around the corner, so get ready. It could also mean a higher risk of people swiping our gadgets and using them. So, security with these devices is going to be important.

The Federal Reserve is trying to figure out what to do about the confusing language in credit card “disclosures.” These notices aren’t written in a way for people to understand easily, and the Fed is trying to change that. Banks are furious about people possibly being able to understand the pamphlets, but it’s definitely a necessity. A reporter at Bankrate.com looked into the paperwork to determine how easy it is to get ripped off on balance transfers, for example. She found that there are 12 things people need to do to pull off a balance transfer without suffering any penalties or fees. There are minimum purchases you must maintain and fees for transferring money. The worst abuses are happening in the credit card industry. You shouldn’t have to go through a 12-step test to make sure you’re not being taken advantage of. Be sure you’re protected. And keep your hard copy of the original offer so you know the rules. And let’s hope the language changes soon.

Cardweb.com recently learned the highest interest rates from the ten largest credit card companies. These are the rates companies impose based on “cross default clauses.” Cross default clauses are any negative marks on your credit report that allow credit card companies to raise your interest rate. Here are the rates: Chase – 30%; Citibank – 30%; Bank of America – 30%; MBNA – 20%; Discover – 26%; Capital One – 27%; American Express – 28%; HSBC – 28%; Providian – 30% and Wells Fargo – 24%. So, if you have a credit card with one of these cards and you carry a balance, you run the risk of paying a 30 percent interest rate. In addition, there is no appeals process to the cross default clauses. If it’s an error on your credit report, credit card companies don’t care. They can still charge that rate. The only power you have is to pay your bills in full and on time. If you do that, you will never be charged these exorbitant rates.

Do you know anyone who pays the minimum on credit cards or a little more? If so, you need to know about the decision by federal regulators regarding credit card rules. Credit card companies have continually lowered minimum payments on credit cards to the point where you could be making payments on your card but your balance is actually rising. So, regulators issued advisory guidelines to prevent banks from doing from now on. So, you are now going to have to pay any interest charges on a statement, plus a portion of the remaining balance. One in nine people pay just the minimum on their credit cards each month. But, under the new plan, those people are going to have to pay off their debt. The good news is that, if you stop using your card today, the longest you will remain in debt is 8 years. But there is no wiggle room. You’ll see a higher minimum and you need to make that payment. You may have to cut back on purchases, but this will force you to get out of debt.

When you go to a store or restaurant and use your credit card, there is a fee that the merchant pays on each transaction. And, credit card companies have been pushing up those fees, which are ultimately passed on to you. Some have accused the credit cards of price fixing, and Visa is the company under the gun right now. Visa started a “prestige” card called “Signature Visa” that has even higher merchant fees. Visa and Master Card set the price on those merchant fees, which some consider to be price fixing. The matter has now moved to the courts, and it’ll take a while before we know if the company has done something really wrong. You may want to check what the merchant fees are on certain cards. It won’t help a lot, but it’s nibbling at the problem. And if you think it’s free to use your credit card, think again.

The Attorney General in California is suing Chase Bank for sending people reward checks that eventually tied those people into paying a $70 to $120 annual membership fee. Chase was specifically looking for foreigners and older people, according to the AG's office. And, an estimated $28 million was taken from victims, according to the L.A. Times. Chase has yet to comment about the lawsuit. But Clark wants to warn you! When you get a check for a couple dollars in the mail, DO NOT CASH IT! More often than not, cashing the check will rope you into some kind of contract. Companies are not going to send you free money for no reason. There is always a catch.

The Federal Reserve is trying to figure out what to do about credit card disclosures because the print is so small and hard to read. Even lawyers get confused when they try to explain the disclosures. The Federal Reserve is trying to figure out if the disclosures should be written in layman’s terms, and, of course, banks are furious about it. A reporter at bankrate.com wrote a story on balance transfers from credit card offers and the small print explaining them. He analyzed the process step-by-step and found twelve ‘gotchas’ in the explanation. Obviously, the Federal Reserve is on the right track. Clark believes the banking industry has a major problem with greed, especially when dealing with credit card portfolios. You should not have to go through a twelve-step test in order to figure out your balance transfer. Clark wants you to go through any disclosures for credit cards you have and find the gotchas that may get you!

Would you believe that the average American household carries 11 credit cards today? We have so many cards these days that the credit card industry is having a hard time getting us to open anymore cards. As a result, the industry is going to send out 7 to 8 billion credit card solicitations. It’s getting harder and harder to get people to open these offers, so banks have started offering some interesting rewards. A NASCAR card, for instance, offers you the chance to be “crew chief” for a day. Another offers you the chance to jump to the front of the line at hip clubs. But there is usually a huge catch with these cards, according to the Washington Post. One American Express reward card, for example, costs $40 a year, and it takes an awful lot to get rewards points. Even if you get the points, there are all kinds of strings attached. Consider getting a cash back or cash rebate card, which offers you cold hard cash. Check out cardweb.com for more information.

Timing is becoming much more important in the credit card industry these days. The penalties people suffer for late payments are unbelievable, according to cardweb.com. One company, for example, charges a $155 late fee. Most fees are $35, but some base the fee on how high your balance is. What’s considered “late” has also changed. Some companies only count your payment as “on time” if it’s received by a certain time of the day. So, even if you get your payment in on the due date, it’s still considered late. And if you’re late on one card, it can trigger penalties from another company. Credit card companies are doing this because the industry has changed drastically. Very few people pay annual fees and about 40 percent of people pay their balances in full every month, meaning they don’t pay any finance charges. So, the other 60 percent are carrying the load for everyone else. If you pay your balances in full, you may be getting airline, money or gas rewards and you probably aren’t paying any fees. But if you’re part of that 60 percent you are getting gouged. You need to get out of that group as soon as possible. And you do that by not using your credit card until you can pay off your balance in full.

Timing is becoming much more important in the credit card industry these days. The penalties people suffer for late payments are unbelievable, according to cardweb.com. One company, for example, charges a $155 late fee. Most fees are $35, but some base the fee on how high your balance is. What’s considered “late” has also changed. Some companies only count your payment as “on time” if it’s received by a certain time of the day. So, even if you get your payment in on the due date, it’s still considered late. And if you’re late on one card, it can trigger penalties from another company. Credit card companies are doing this because the industry has changed drastically. Very few people pay annual fees and about 40 percent of people pay their balances in full every month, meaning they don’t pay any finance charges. So, the other 60 percent are carrying the load for everyone else. If you pay your balances in full, you may be getting airline, money or gas rewards and you probably aren’t paying any fees. But if you’re part of that 60 percent you are getting gouged. You need to get out of that group as soon as possible. And you do that by not using your credit card until you can pay off your balance in full.

You’ve probably heard Clark talk about the problems people are having with debt these days. Going back to the ‘80s, debt issues came up from time to time. But it wasn’t something Clark heard about a lot. Even when the country was in a recession about 0 or 12 years ago, he didn’t that many questions. But the volume of calls has intensified greatly over the past few years. The Christian Science Monitor recently reported on the topic, calling it, “King Kong Debt Meets Middle Class Life.” The average credit card debt is more than three times what it was in the early ‘90s. That is huge. If you go back just one generation, most people paid their credit card bills in full every month. Today, about 35 percent pay their cards in full and the rest are carrying balances. In addition, people are saving much less than they did a generation ago. The average a generation ago was about eight percent. Today, we’re saving less than two percent. On top of all that, bankruptcy filings have also ballooned. About 1.6 million families are filing for bankruptcy today, compared to 300,000 a generation ago. And, this has happened over time. It’s not like we just woke up one day and were in much more debt. So, Clark wants you to consider how you use and spend money. Cutting back on the plastics is the first order of business. You must stop using credit cards entirely if you want to get a handle on your debt.

Clark is getting lots of calls from people looking for all kinds of deals on credit cards that offer rewards or cash back. At the same time, people are also calling about rising interest rates on credit cards. One recent caller’s rate had gone from 9.9 percent to 27.9 percent in a very short period of time. The credit card market has split into two major categories. The first serves the people who pay balances in full and are not considered a risk to companies. About 40 percent of people do this. Clark does this, and he earns a nice amount of cash back every year. The other group is charging at or near their limit. Credit card companies have a target on the backs of these people, and they plan to eat them up with fees. According to the Wall Street Journal, 85 percent of credit card issuers are now hitting consumers with punitive interest rates if they are a second late with their payment. Credit card companies are now even pulling reports on us to see if we are late with payments to other companies. In the mice type of their agreements, these companies say they can raise the interest rate on your card if you haven’t paid another merchant on time. It’s very important to pay off your balances in full each month and to limit your credit card charges.

We have set a new record when it comes to our use of credit cards. Currently, we have the largest delinquency rates in the history of the credit card business, and the largest amount of personal debt. If you can’t make your credit card payments, it goes without saying that you need to get back on top of it. If you’re not in trouble, but the danger signals are there, Clark has some tips for you. First of all, running balances is okay but it’s not financially healthy. Many of these balances are all about your lifestyle. So, if you’re just able to make the minimum payment, you need to stop using the card. Clark has learned that asking people to cut up their cards doesn’t work. But putting them away – preferably in a freezer bag with water – will stop you from using them. It’s the ease of pulling out the plastic that kills us. And, the key to making bigger and bigger payments is to put yourself on a schedule. Come up with an amount of cash that you will hold onto until the next payday. It’s not enough to talk about the problem. You’ve got to come up with a solution. Take a brown bag to work. Avoid that expensive cup of coffee every day. People can get by on so much less; they just haven’t tried it yet. And, it’s important to start good money management early. According to Newsday, only one in four percent of parents ever discuss money with their children. There is a real disconnect here. Parents lead by example, so your kids will pick up on what you do not what you say.

We have set a new record when it comes to our use of credit cards. Currently, we have the largest delinquency rates in the history of the credit card business, and the largest amount of personal debt. If you can’t make your credit card payments, it goes without saying that you need to get back on top of it. If you’re not in trouble, but the danger signals are there, Clark has some tips for you. First of all, running balances is okay but it’s not financially healthy. Many of these balances are all about your lifestyle. So, if you’re just able to make the minimum payment, you need to stop using the card. Clark has learned that asking people to cut up their cards doesn’t work. But putting them away – preferably in a freezer bag with water – will stop you from using them. It’s the ease of pulling out the plastic that kills us. And, the key to making bigger and bigger payments is to put yourself on a schedule. Come up with an amount of cash that you will hold onto until the next payday. It’s not enough to talk about the problem. You’ve got to come up with a solution. Take a brown bag to work. Avoid that expensive cup of coffee every day. People can get by on so much less; they just haven’t tried it yet. And, it’s important to start good money management early. According to Newsday, only one in four percent of parents ever discuss money with their children. There is a real disconnect here. Parents lead by example, so your kids will pick up on what you do not what you say.