(photo credit: j thorn explains it all)

So much talk about the debt ceiling, so little explanation. The “ceiling” in this case is the limit of how much debt the U.S. government allows itself to take on. That’s why it’s up to Congress to decide what to do now that we’ve pretty much hit that limit. They can raise the roof and make it okay to go deeper in debt, or they can refuse, and the U.S. won’t have enough money to pay off some of the debt it already has.

But what does that mean to you? Conveniently, our friends over at Marketplace have explained why the debt ceiling is important to the average American in “How the debt ceiling affects the average American.” They use an actual example of an actual average American, who emerges from the conversation pretty shaken. (One side effect of the debt ceiling problem is that it freaks people out and makes then snap their wallets shut – otherwise known as shaking consumer confidence.)

Anyway, if Congress doesn’t agree to raise the debt ceiling, then the U.S. government won’t be able to pay its creditors back as promised. And just like a person who takes out a loan and then doesn’t pay it back, a default will lower America’s credit score (or credit rating, which is the national equivalent of a credit score). And with lower credit ratings come higher interest rates on future loans. After all, the bank is taking a bigger risk on you because you’ve shown in the past that you’re not the most reliable borrower. So they’ll let you borrow – but you’ll have to pay.

So what does this have to do with us average Americans, you ask with vague irritation? Well, generally what happens when interest rates increase for the government is that interest rates increase for everyone. So if you wanted to get a loan to buy a car or a house, you would end up paying a lot more for it. And if you have any credit card debt, those interest rates will go up, too. So instead of paying an extra 18% or 30% on the balance you’re carrying month to month, you’ll be paying something frighteningly larger.

Go ahead and see if you can survive the credit storm now, because if the roof isn’t fixed, the weather might be a lot more threatening in the near future…