In 1949, a finance executive named Frank McNamara invited two friends to dinner at Major's Cabin Grill in New York City. At the end of the meal, McNamara found that he had forgotten his wallet, and he was forced to call his wife for money. McNamara vowed never to face that humiliation again. He made good on the vow: A year later, he returned to Major's and this time paid the bill with a new product--a small piece of cardboard.

Thus was born Diners Club, the world's first credit card. Within a year, 20,000 such cards were in circulation throughout the country; today, there are 1.5 billion--five for every American man, woman, and child. What in McNamara's day was a convenience that allowed the rich to dine out without cash is now a staple of middle-class life.

Credit cards have proliferated for many reasons. Some are economic: At a time when average earnings are stagnant, when sudden income drops bemuse of layoffs or health problems are common, and when public and private insurance systems have frayed, families increasingly turn to credit cards to serve as their financial safety net. The growing reliance on plastic is also about culture: Americans love freedom. Just as the invention of the mass-produced automobile gave us the freedom to travel wherever or whenever we wished, credit cards allow us to spend money in ways and at times that work for us.

These freedoms, however, make both cars and credit cards dangerous if they are used improperly. The difference is that in the past 40 years, we've taken steps to make automobiles safer. As cars became an integral part of middle-class life, traffic fatalities rose sharply. In the 1960s, thanks largely to the efforts of consumer advocates, Congress passed landmark safety legislation that led to mandatory seatbelts and rear-window brakes lights. The new rules reduced accident rates and made those crashes that did occur less deadly (the auto fatality rate has dropped 57 percent since 1966).

While cars continue to become safer, credit cards are becoming more dangerous. Of course, cards don't kill, but they threaten families in other ways. Credit-card debt totaled $685 billion last year, and the problem is getting worse: In the last decade, credit-card debt rose by about 70 percent. Although economists debate whether rising costs or rising consumption have contributed more to that trend, there is no question that most Americans experience the debt as a burden. Seventy percent of American families said last year that they are canting so much debt that it is making their family lives unhappy; three times more young people are worried about going deeply into debt than about a terrorist attack.

Credit cards are especially dangerous because of the business practices of credit-card companies. Buried in those offers you receive daily in the mail from banks like MBNA and Chase are fine-print contract terms not subject to negotiation. Cardholders who miss a single payment may be hit with two separate charges: a $39 fee and a penalty interest rate of 2499 percent or higher. Those who mistakenly go over their credit limit no longer have their cards declined. Their purchase is charged, along with a $35 fee and--you guessed it--the 24.99 percent penalty rate. These fees can quickly double or triple the underlying debt on the card. Perhaps most egregiously, even families who pay their bills on time can be hit with penalty rates. Under a practice known as "universal default," companies can raise rates based on a change in a customer's credit score, a dispute he has with another creditor, or even a purchase he makes that they don't like. These new rates apply even to old credit, so if you bought a washer and dryer and new clothes for the kids, all at 7.99 percent interest, you can get socked with a 24.99 percent rate--even if you have made every payment on time.

Practices such as these are great for the industry's bottom line. From 1996 to 2003, the money credit-cant companies make from fees has more than quadrupled, to $7.7 billion. Families aren't making out quite as well. Penalty fees and interest combined now cost average credit-card holding households more than $800 each year. All told, Americans cough up about $90 billion annually in interest and penalty payments on credit cards. That's $90 billion that could have gone into car repairs or college tuition or savings accounts--and ends up in company bottom lines instead.

For families with adequate incomes, that $39 fee may be just an annoyance. For families on the edge, a cascade of penalties and fees can mean economic ruin. Both in the United States and abroad, there is a clear correlation between rising credit-card use and increasing rates of bankrupt. At a time when more Americans have no choice but to depend on consumer credit, more families find their cards offer no safety net at all--they are instead, in the words of Harvard law professor Elizabeth Warren, a cement life raft.

Stable families shouldn't be slammed by fees they had no reason to expect. And struggling families shouldn't be getting pushed into bankruptcy by companies purporting to offer them a solution to their problems. This doesn't mean we should take credit cards away from borrowers, any more than the consumer safety movement meant taking cars away from drivers. But it does mean that we need to make credit cards safer to use, with measures that honor Americans' freedom but empower them to protect their own financial interests.