Robert Manning, professor of consumer finance and director of the center for Consumer Financial Services at the Rochester Institute of Technology is perhaps one of the most outspoken and informed observers of financial trends in this country today.

At a glance Name: Robert Manning Title: Author, professor, founder of CreditCardNation.com Hometown: Rochester, N.Y. Career highlights: Director of the Center for Consumer Financial Services and research professor of consumer finance at Rochester Institute of Technology Author, "Credit Card Nation" and the upcoming "Give Yourself Credit"( for Spring 2007) 2001 winner of the Robert Ezra Park award for Outstanding Contribution to Sociological Practice Founder of the Web site, CreditCardNation.com Avid consumer advocate who has testified in front of several U.S. Congressional Committees concerning banking and finance.

His milestone book, "Credit Card Nation," published in 2000, illuminated just how much credit cards have changed the way we think about and spend money. An avid consumer advocate devoted to helping solve what he sees as the consumer debt crisis, Manning frequently appears before the Senate and House committees offering expert testimony and advice. His next book, "Give Yourself Credit," to be published this spring, will help consumers use credit cards and other debt wisely and responsibly.

You've said in the past that credit cards have fundamentally changed the way Americans think about money. How so?

Credit cards have created a cognitive disconnect between what Americans buy and what they can actually afford. When a purchase isn't cash-based, people don't calculate the real cost -- like how many hours of work did it take to get that? The buy-it-now-and-pay-later mentality makes you feel like you can always afford it.

Try this simple trick if you want to see what I mean. Go to the mall and leave your credit cards in the drawer at home. You'll be surprised how many times you'll reach for something and then think better of it if you have to pay in cash.

Research shows that Americans will buy 15 percent to 25 percent more with a credit card than they will if they shop with cash. Americans now spend 130 percent of their discretionary income on their financial obligations and a huge amount of that is credit card debt. No wonder the Commerce Department just reported a negative 1 percent savings rate for 2006, the lowest level since 1933, during the Great Depression.

What are the dangers of too much credit card debt for consumers?

It's simple really. More Americans will end up in bankruptcy. It's not just because Americans have racked up too much debt, although with the average American carrying $13,000 in total debt liability, they certainly have. But it's also because of rising interest rates. In addition to carrying a load of credit card debt, many people with adjustable-rate mortgages have seen their house payments skyrocket with the increase in rates. These same people may already have a home equity loan (perhaps to consolidate previous credit card debt) and may also see that interest rate rise. Add to that the fact that credit cards have no interest rate caps and you can see that there's no protection for consumers who are already struggling.

Credit cards have also taken away the notion of an emergency fund. For people who can't handle that lack of cushion, it's a real problem. Now if the car breaks down, they just put the repair on the card. Sure it gets them out of a jam, but chances are they can't afford to pay the whole balance at the end of the month. That means they're paying for that emergency -- plus interest -- for months and months. When little and big catastrophes happen, Americans end up financing them at huge costs on their credit cards.

Even more scary, Americans are simply deferring the consequences of all this until they retire 20 or 30 years from now. That's what I learned when I conducted the Living with Debt study with LendingTree two years back. When you look at the numbers, the coming generation of retirees is about to enter their golden years heavily in debt. That means they'll have to rely even more on government programs and their own children to make ends meet.
   
Surveys show consumers don't always understand how credit cards work. What are the consequences for uninformed consumers?

Banks are playing a cat-and-mouse game with Americans, and consumers are losing. The worst move is universal default. The credit card industry has access to all financial liabilities on your credit report. So now if they don't like something you've done -- say you paid off your student loans on a low-interest rate card, or you missed a payment on another card -- they can arbitrarily raise your interest rate, sometimes to as much as 30 percent. What's more, the credit card companies won't tell you what it was that made them decide to raise your rate, and they also won't tell you what to do to make it lower again.

These days with credit cards, the consumer is reduced to working with a set of terms that almost always benefits the lender. Once consumers realize that, they'll naturally start using credit cards more wisely and become more skeptical of the terms of agreement.

What's the one piece of advice you would give to consumers to help them take control of credit card debt?

Make a budget and stick to it. A budget will tell you immediately if you're using your credit card for real needs or if you're using it to finance your wants and desires. In other words, are you using your credit cards to live above your means? If the answer is yes, a budget will bring you back to reality and help you get control of your credit card spending.

Walecia Konrad is a freelance reporter who specializes in business and personal finance, and is based in Brooklyn.

This story ran on BankRate.com on February 20, 2007.