I think everyone pretty much knows this answer, in one way or another. When you're making working-class income in the Bay Area ($10-15/hr, and this was back when minimum wage was $8.50 in California), your experience is generally hand-to-mouth. You get a paycheck, you pay as many bills as you can, and put off paying others until you can better afford it. You shop for food that'll cover you the next two weeks, and you buy public transportation tickets. Maybe you splurge on dinner that night.
Credit card companies must love that, because they seem to have just the right credit lines for your lifestyle. You can get low range cards with, say, $500 limits on them and 20% interest, and that's great for covering that little overage you need right away that can't wait 'til next paycheck (like medical co-pays or more public transit fare).
Soon, little by little, you start owing more. If you're lucky and your salary improves over time, they'll up your credit line. Big deal, but the bit here is that your overall debt doesn't look so bad. Minimums are paid, and your debt never really gets all that smaller - or, more commonly, it bobs up and down as you adjust to your new spending limits.
In my case, I made plans to repay. I wanted to take vacation in Sweden, and I couldn't afford the cash outlay right then. I *could*, however, afford to pay off the debt it'd take within a few months. No problem! So I went, and made efforts to pay back the amount I spent, yet never really got there. So the amount I owed grew.
Then there was the siren call of balance transfers. I learned from the first few I did, and did APR savings calculations. Then again, it's simply just another siren call: yes, you have a credit line with 0 balance again - hey, can your friend use your low interest rate balance transfer and just pay you back over time?
Little things pile on more, and then there are big things - dental work, car repairs, a missed insurance payment. Co-pays for lab work. The household got an unexpected expense, we're moving and need to pay the movers, a trip to Starbucks bounced three things... all that sort of stuff.
Then I got lured into BofA's debt consolidation personal loan, which I knew was bad but did anyway. After being on the phone with a rep, I said - listen, the best of my cards has only 10% APR, and the worst is 16%. You're offering to move all this debt for a 3% fee and put me at 22% APR. How is that better for me? Well, they responded, you'd have it all in one place and it'd be easier to repay - only one bill to track! True, I thought. I then said that the APR was way too high. She told me that I could have it lowered after a few months of on-time payment above the minimum.
Always. Always. Always get that in writing. After a few months, no - I couldn't get it lowered. They "review" your account once per year, and while they were happy to do so for me just this once, they could tell that nothing about my situation had changed and that I was stuck at 22%. So I balance transferred $22,000 right back into several other cards, paying about $400 in fees (plus the initial fees) - putting me right back where I started, and even more in debt than I was before.
What credit counsellors will tell you is to cut up your cards and pay as much as you can every month, and not get any new lines of credit. This generally works. However, I just locked them away. Now I have one card that I never charge anything to, which has $18,000 of debt on (and I don't pay APR on until Oct. 2012), and another card which I rack up points on which has about $2,000 on it. I haven't really made much of a dent, at least it seems. As it stands, actually, only $18,000 of that debt is mine - thank goodness - and the rest was used to cover purchases for other people in my household (which they're repaying steadily).
Still, it's a bit daunting for me being $18,000 in debt. Although my paychecks look large, I'm only keeping about $50 a paycheck for myself. The rest is going to the house, health needs, and lots of credit card repayments. The trick, as it stands, is to stop building up more. In the meantime, it does make it difficult to dream big in the near future - buying a house, for example.