CHRISTMAS CRUNCH: 'TIS THE SEASON TO BE DECKED BY DEBT

Holiday shoppers often end up buried under the crush of credit card debt.

Most people expect to charge $400 worth of Christmas presents, but end up making $600 worth of credit-card purchases, according to an American Bankers Association survey.

With credit-card interest in the 21 percent range, it is easy to see why this is the season to be decked by debt, financial experts say.

"That's a lot of money to owe when the holidays are over," said Patricia Soileau, who manages the Consumer Credit Counseling Service office in Cape Girardeau.

The local office is one of 26 branch offices in Missouri, Illinois, Tennessee, Arkansas and Kentucky. The main office for the credit counseling service is in St. Louis.

The service is free to the public. Creditors and businesses fund the service because it helps ensure that consumers will pay their debts.

Soileau said her office sees fewer clients in December because people don't want to give up their credit cards during the holidays. But in January, those debt-ridden shoppers will be calling for appointments, she said.

Nationwide, consumers are expected to spend more this holiday season than last year.

Holiday sales are expected to be up 3 to 4 percent. The average family will spend $813 for holiday gifts compared to $806 a year ago, estimates CardTrak, an independent organization that tracks consumer spending.

American Express Retail Index puts the figure even higher. According to its October survey, shoppers are expected to spend $1,233 per household. Of that amount, $879 would be spent on gifts. The remaining expenses would be for holiday entertaining, decorations and travel.

"Most holiday spending nowadays is put on credit cards," Soileau said.

She said one of her clients used four credit cards to get a cash advance of $3,500 so the family could take a holiday trip.

But cash advances are costly loans because they carry a 34 percent interest rate, she said.

"When a credit card company is accepting payments, the very last thing they accept payment on is a cash advance," explained Soileau.

As a result, a consumer ends up paying and paying on a cash advance, she said.

Even regular credit-card spending can take years to pay off. Soileau said one of her clients in 1993 was still paying off debt from holiday purchases that had been made six years earlier.

Home shopping channels on cable television can be a financial time bomb for some shoppers, particularly elderly consumers who buy all their Christmas presents that way.

Soileau said one woman charged $6,700 worth of Christmas gifts through the QVC shopping channel.

People spend beyond their means, regardless of income, she said. "The more you make, the more you spend."

Nationwide, credit-card debt today totals half a trillion dollars, up $113 billion over a year ago, Soileau said.

More than 1 million Americans filed personal bankruptcy in 1996, a 29 percent increase over 1995.

"The average person has nine credit cards and I think by next year it will probably be 12," she said.

Soileau said credit-card debt is partly to blame. "It is easy credit. Look how many people get pre-approved cards," she said.

Even college students who don't have jobs have no trouble securing credit cards.

Today's college students have $2,400 in credit-card debt, on average, she said.

One Southeast Missouri State University student rang up $6,000 in credit-card debt in two months, Soileau said.

Too many Americans know little about money management. "Baby boomers are not money wise at all," she said. "This generation has gotten their needs and their wants mixed up."

When it comes to Christmas, a little advance planning can help, Soileau said.

"Christmas club accounts are a good thing," she advised.

Consumers should put aside a little money each month so they can afford to buy all those Christmas presents without going into debt, Soileau said.

"Don't spend over that," she said.

Even if you don't manage money wisely this holiday season, you can always look ahead to next year.

Shoppers who take advantage of after-Christmas bargains will have a head start on filling next year's holiday shopping list, Soileau said.