For decades, the credit card has symbolized the American way of life, but this recession may force both the symbol and the reality to change.
Spooked by plunging home prices and mounting job losses, consumers have cut back on credit card use, pumping less cash into an economy that depends on their ability and willingness to spend.
Meanwhile, Congress, reacting to complaints about credit card marketing practices, has tightened the rules on penalties and fees — spurring bankers to warn that consumer credit will become more costly and difficult to obtain.
The credit card issue is part of a larger problem of how to ensure that the financial system supplies enough credit to keep the economy moving without providing so much that it overheats and collapses.
Industry critics say soaring debt helped cause this recession, which has now unleashed economic forces that will end the free-spending behavior symbolized by credit cards.
"As a society, we'll never be able to go back to the way things were," said Robert Manning, a professor of consumer behavior at Rochester Institute of Technology in New York and author of the antidebt manifesto Credit Card Nation.
But James Chessen, chief economist for the American Bankers Association, said consumers rely on credit cards to enhance their lifestyles and will want credit available when better times return.
"The fundamental desire to buy things today and pay interest for the privilege will remain part of the culture," Chessen said.
Daniel Ray, editor in chief of CreditCards.com, said credit cards began as exclusive perks in the 1960s and 1970s but evolved into mass-market products in the 1980s and beyond, thanks to the use of credit-scoring technologies.
Using credit scores, he said, banks could tailor rates and terms to an individual's likelihood of making or missing payments.
"They created a multitude of products for a multitude of needs," Ray said.
This credit retreat could prove temporary or permanent. But Ray said the recent congressional legislation was intended to curb the marketing practices that enabled banks to expand card ownership over the past two decades.
"You could get zero percent for the first year, but after that, if you tripped up, the low introductory rate became very high in a hurry," he said.
The bill signed by President Barack Obama on May 22 will prohibit banks from raising rates on existing balances unless a card holder falls more than 60 days behind on minimum payments.
The banking industry, which fought the changes, now warns that the bill will force issuers to restrict access to cards and raise the overall cost of borrowing.
But critics say banks targeted vulnerable consumers and then profited when they missed payments or exceeded credit limits.
The credit card situation is just a microcosm of the larger wave of debt that has swamped the economy in the past 20 years.
The Federal Reserve Bank of San Francisco recently issued a report on total household debt — everything from mortgages to credit cards. It showed that consumers doubled their debt load over the past two decades. By 2007, the average household had $1.33 in obligations for every $1 in personal disposable income.
Manning, the credit industry critic, said now that the recession has thrown millions out of work, that burden has become more difficult to sustain.
"We have more debt than at any other time in history and less income to pay it back," he said. "That's really where we are right now."