Johann Hari: The chickens we bought on our credit cards are about to come home to roost

Debt helplines say they are maxed out with calls from panicked consumers

Where is your credit card bill? Mine is living in the fridge. It is unopened, unread and almost certainly in the red; I'll wait for Barclaycard to give me the customary angry call (and fat fine) before I try to find the cash.

Where is your credit card bill? Mine is living in the fridge. It is unopened, unread and almost certainly in the red; I'll wait for Barclaycard to give me the customary angry call (and fat fine) before I try to find the cash.

It is a strange comfort to know I am not alone: we are a nation in deep credit-card denial. This week, NatWest joined the roll-call of banks - Barclays, HSBC - warning that card arrears and bad debts are mushrooming in Britain. Repossessions have now hit their highest level since 1995, and all the debt helplines say they are maxed-out with calls from panicked consumers.

Across the West, attitudes towards debt have mutated at an extraordinary rate. My grandmother - a typical working-class woman of her generation - considers debt to be a shaming, sordid secret. She still shudders when she recalls the £8 loan she took out in the early 1950s, and she finds my Rolodex of chaotic credit cards incomprehensibly dangerous. But among my age group, I don't know anyone at all who isn't marinated in debt. The average twentysomething owes £16,000, according to the Consumer Credit Counselling Service (CCCS), and about a third of us live in a protracted state of credit-denial. In one recent poll, 70 per cent of young people said there was "nothing wrong" with living in debt. The credit card revolution has suffocated the stigma surrounding debt in just two generations.

Is this an entirely bad thing? It's important to remember what a world without access to credit was like. A whole class of people was cut off from buying consumer goods because of a lack of initial capital. My grandparents had to spend years saving to buy their first television, because the idea of buy-now-pay-later did not exist; ditto, their first fridge. Is that a world to pine for?

For a lot of people today, credit works. But for two groups in particular, it doesn't. They are - and I know this sounds like the name of an American day-time soap - the young and the poor.

Today, a remarkable 60 per cent of personal bankrupts are under 30: buy now, pay never. Malcolm Hurlston, the former head of the CCCS, explains: "We have clients in their twenties who are on debt management plans which will last until they are in their late thirties. This is not a good way to start off if you want to get married, buy a property, start a family - all the normal processes most of us expect to happen. We need to know what is driving young people to rack up debts of over £20,000 and £30,000 in their twenties." Apart from a few spoiled Trustafarians, young people with large debts do not have any capital to fall back on. If the economy begins to droop, they will be disproportionately hurt.

For some professional Victor Meldrews, this is a sign of a uniquely feckless and hedonistic generation. No discipline! No restraint! I don't think it's so simple. No other generation has been bombarded with hard-sell loan offers. While my parents had to beg for loans, I have to virtually fight them off. Barely a week passes without us being offered swathes of easy, instant cash. It would take a great deal of moral restraint to resist every time, especially since we are actually required to get into debt for Good Reasons (like a University education) elsewhere. Nor has any other generation been subject to saturation-advertising, or to a society that values gluttonous consumption above all else.

But these explanations will be little comfort as the repossession notices are nailed up, and, for the other debtor class - the British poor - the dangers are greatest of all. One of my neighbours who lives on a grim estate is constantly having to turn away Dickensian door-to-door creditors (some legal, some not) asking "Do you want to be able to buy your children some presents?", often in front of her little girl.

In his report for the New Economic Foundation, 'Profiting from Poverty', Henry Porter explains: "Big business, including some of the world's leading financial service companies, is involved in a highly lucrative industry that feeds off poverty and financial exclusion. The result is that those least able to afford credit end up paying the most for it."

In Britain, the poor are catered for by a dodgy market known as "sub-prime lending". If you are one of the 8 million people who don't have the income or financial stability to qualify for the nice air-conditioned banks, you fall into this category - and you can face stratospheric rates of APR. The report describes Mary, a single mother living on benefits in east London, who was offered a £200 loan by a legal money-lending firm. Under the terms of the agreement, she was required to pay back £300 over the course of 30 weeks (a level of 330 per cent APR). After just a month, she obviously found she couldn't afford it - so she was offered a second loan of £500 to settle her debt and cover some essentials. Again she defaulted; this time, she was offered a £1,000 loan to cover it. And on and on, so that in just six months her £200 loan had swollen to £2,227, and eventually exceeded £7,000.

This form of predatory lending, Porter explains, "not only devastates individual families and households. It is systematically stripping the wealth and assets of some of the country's poorest neighbourhoods... Too often, what the taxpayer is providing through welfare and regeneration budgets, the lender is taking away - with interest".

If the debt situation is this bad during a time of economic prosperity and near-full employment, what will happen if the economy tanks? Last year, the Government finally introduced legislation to mop up the more blatant abuses. APR rates now have to be prominently advertised. The Office of Fair Trading can at last fine rogue lenders, and there is an independent Financial Ombudsman. And there's more: the helplines for people in chronic debt have been given big funding increases, and the Government is trying to coax legitimate banks to offer more services for the poor.

These are good advances, but they are not enough. No society has had such ready access to credit before. We are discovering the hard way that it takes training and willpower - as well as tough government regulation - to negotiate your way through it safely.

There was a depressing illustration of how ill equipped we are to deal with this in the Big Brother house last week: the housemates were literally incapable of making and keeping to a budget for their household goods, persistently getting the sums and principles wrong, and overspending by £57. One of them actually thought that the higher an APR rate is, the better. If you saw the state of my overdrafts, you would know that I sympathise. It will take years of education to equip people to live in the new high-credit economies.

But that training may come too late for many of us, because - if the banks are right - the chickens we bought on Mastercard are about to come home to roost. Perhaps I had better take that Barclaycard bill off ice after all...

j.hari@independent.co.uk