Are you the customer credit card companies love? Do you carry a high balance each month even though you make your payments? The cardholder who pays off a card each month and so does not carry a balance is not a profitable customer for the bank.

A friend who is in finance recently spoke with me and gave me his input on the credit card industry.

"Remember, the only time a credit card company really makes money is when you own interest on an unpaid balance. If you have no balance, they refer to you as a deadbeat - someone of no value to them," he said.

How did the credit card industry become so pervasive and powerful? In this time of financial shaking among consumers and concerns about defaults on mortgages, it's time to examine the power of the credit card companies.

The credit card industry was successful in going before Congress and fighting usury laws that would have restricted the amount of interest they could charge a consumer.

From 1980 to 1990, credit card use expanded dramatically. A PBS report in an article titled "The Ascendancy of the Credit Card Industry" by Robin Stein showed that:

"Between 1980 and 1990, the number of credit cards more than doubled, credit card spending increased more than five-fold and the average household credit card balance rose from $518 to nearly $2,700. With the cost of money sinking and average balances climbing, profits soared."

The report detailed how banks introduced annual fees on credit cards during President Jimmy Carter's term and how they fought usury laws during the administration of President H.W. Bush in 1991.

"A key player in this evolution was Andrew S. Kahr, a child prodigy who earned his Ph.D. in mathematics from MIT by age 20. Now a financial industry consultant, Kahr pioneered several ground-breaking consumer banking products and founded a small credit card company in 1984 that would eventually become Providian, one of today's top 10 issuers.

"Before many others in the industry, Kahr discovered that it was possible to analyze vast troves of consumer financial data and reliably predict which customers were least likely to pay off their credit card balances each month."

This provided the information for banks to learn which consumers were the profitable segments.

My financial friend said do the math. 

"Let's look at a person who has the typical $,9,500 balance on their credit card, as reported by the ‘newspaper'. Now let's add in another factor, that same person has 5 credit cards.............which by the way is not unusual. Now let's say that they carry an average interest rate (for conversation only) of about 16%. Now whether that is high or low is immaterial at this point in the conversation. Because, I will give you examples of higher interest rates and with people we deal with every day!

Let's look at the basic math.

There is an average of 5 cards, at an average $9.500 @ 16% interest ($47,500). That equates to $102,125.00 to the credit card company. Now when you see the advertisement about your vacation on MasterCard as being priceless..... well now you know!!!

Fighting credit card debt can begin at home.

If you're prone to impulse buys then ask your spouse or a friend to help you not charge on a frivolous item each week.

Agree to not use your credit cards again until you have paid down a certain percentage of the balance.

Make 2 -3 times more than the minimum monthly payment.

Teach your children to become investors and not just spenders. If they're going to spend money at Best Buy, Circuit City or other type of big box outlet then help them find ways to earn the money from someone else before they go spending. Also, help them to stop and ask themselves "do I really need this purchase?"

Paying down credit card debt and learning to save is in your power to do so