Credit: The Importance of Being in Debt

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The consumer, for his part, is eager to try new ways of going into debt. One increasingly popular method is for a homeowner to refinance his old mortgage, thus getting from the bank, in effect, a new loan equaling what he had already paid off on the old mortgage. New forms of charge accounts, including those that can be repaid in installments, have become so widespread that 65% of all department-store sales are now charged. Many stores are also encouraging today's affluent teen-agers to take out special charge accounts. To speed the wheels of the credit society, an Alexandria, Va., firm last week introduced a compact electronic system called Credac that will check a customer's credit within ten seconds when fed the number of his charge account.

Patriotic Duty. Credit cards have grown steadily, opening ever wider possibilities of pay-later living for businessmen, travelers and impulse buyers, who now owe a fancy $656 million. The cards can now be used like cash at most airports, hotels, restaurants and shops, and credit-card companies are scrambling to arrange more uses. The 1,250,000 holders of Diners' Club cards can charge an African safari, and credit cards are now used to get haircuts, buy theater tickets and rent mink coats. The Carte Blanche card can be flashed as an instant credit reference at 1,300 U.S. hospitals: just wave your card at the ambulance attendant.

So far, the only uneasy signs that credit may be reaching its limit are the growing number of mortgage foreclosures and personal bankruptcies-but neither has reached a disturbing level. Most Americans are so conditioned to first-of-the-month check writing that serious lapses in meeting payments are surprisingly few; bad debts total less than one-quarter of 1% of sales. Thanks in part to the tax cut, Americans now apply a record 14% of their available spending money to debt repayment, while at the same time increasing savings and building up personal assets faster than debt. Though consumers are taking on installment debts at the rate of $65 billion this year, the percentage increase is actually less than last year. But consumer credit is expected to take off on an even faster upward spiral next year as more and more new families keep forming and -like true red-blooded Americans-going into debt.