A massive wave of credit card defaults could be the next crisis to hit the banking industry, according to some financial industry experts.

But credit counselor Tracy Johnson says the country’s problems with credit cards is nothing new.

“It has been a huge problem in the economy for a long time, and I see it increasing as long as the economy looks scary to people,” said Ms. Johnson, an education specialist with Consumer Credit Counseling Service of Chattanooga, a division of the Partnership for Children Families and Adults. “I think it’s time for most us to go on a cash-only diet.”

Banks wrote off an estimated $21 billion in bad credit card loans in the first half of 2008 as more borrowers defaulted on their payments, according to The New York Times. Higher than average unemployment rates, coupled with the overall slowdown in the economy, could mean the industry stands to lose at least another $55 billion over the next year and a half, analysts told The Times.

Credit cards have been a big market in terms of securitized loans, said Bento Lobo, UC Foundation associate professor of finance at the University of Tennessee at Chattanooga.

The average American with a credit report has nine credit cards and is about $16,635 in debt, excluding mortgages, according to industry Web site creditcards.com.

“When you think about it in those terms, there is a lot of credit card debt out there,” he said. “I wouldn’t be surprised if it is a segment of the market that is going to be hurt.”

Dr. Lobo said he anticipates credit card issuers raising their rates, making it harder for new borrowers to get them. Credit card issuers are going to be much more discerning in terms of how they select potential users.

For people who already have credit card debt they are worried about, Ms. Johnson said the best thing to do is first stop using the card. She suggests calling the card company and asking for a lower interest rate, and if the consumer anticipates difficulty making payments, ask if the issuer can put them on a hardship program for a period of time.

At Consumer Credit Counseling Service, Ms. Johnson often sees people who already are having problems with credit cards, with 70 percent of clients saying they are having trouble paying their credit card bills. For them, the counselors work with the credit card company to negotiate reduced payment plans and lower fees and interest rates.

She thinks the country eventually will come out of the current slowdown and urges her clients to not panic but try to strike a balance with the finances.

“It’s not realistic to tell people not to use their credit cards at all, especially with Christmas coming up,” Ms. Johnson said. “I tell people, if you’re going to use a credit card, make sure it is something you can pay off within a three-month period.”

The New York Times contributed to this report.

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