DROWNING IN DEBT: PLANNING THE BIG CREDIT CARD PAYOFF

Kara Stokes of Cairo, Ill., didn't think she was spending that much money on Christmas gifts while she was shopping ... until she got her credit card bill for nearly $500.

"That's much more than I had intended to spend," Stokes said. "It didn't feel like that much because I was putting it on my credit cards."

Besides, she said, she had to get the presents and she didn't see any other way to buy them. "What else could I do?" she asked.

Delanie Tanchek of Cape Girardeau found herself in a similar situation when she saw her Christmas credit card debt up to a staggering $700. Tanchek works at a convenience store and said that is a lot of money.

"But I felt I needed to get the presents," Tanchek said. "It didn't enter my head that I wouldn't be able to pay for it later. You don't have the money, but having the credit cards makes you think you do."

Tanchek and Stokes are among millions of Americans who face seemingly insurmountable credit card debts this month. Presently, credit card debt in the U.S. totals $400 billion, says a recently released report by Consumer Credit Counseling Services, a non-profit agency that collects delinquent debts for creditors.

Christmas is largely responsible for much of that debt: More than $150 billion was charged during the 1996 holiday shopping season, the report says.

"It makes them feel like a king to buy all those presents at Christmas time," said William Holly, manager of Cape Girardeau Consumer Credit Counseling. "They feel pressured to buy gifts for everyone so they buy the gifts with money they don't have through their credit cards."

Holly said the interest that many cards charge is high. At 18 percent, if someone has $3,900 in a revolving credit balance, it will take 35 years to pay it in full, if just the minimum monthly balance is paid. That makes for a $10,000 interest payment, he said.

But there is hope for those who find themselves in what seems like an irrevocable situation, Holly said. His organization takes clients at no charge and helps them burrow their way out of the hole of debt they find themselves in.

"The first thing we require them to do is cut up their credit cards," Holly said. That has been a pretty unsettling thing for a lot of people who have come to rely on the cards, he said.

"One guy threatened to jump off the bridge if we cut up his cards," Holly said. "But you've got to do that, you've got to shut down that borrowing. It's been proven that you can't get someone out of debt with the card."

After the cards are destroyed, Holly or one of the other two counselors at CCC look at the client's cash flow and work out a budget, he said.

They weigh the creditors versus the cash flow, Holly said. The clients then make monthly payments to CCC, which makes payments to the creditors for them.

"Then they've either got money left over or they don't," he said. "It may require them to take on a part-time job or send the wife back to work, but the money has to be paid back one way or another."

Tanchek said she has already cut up all of her credit cards and is making plans for next year. "Next year I'm paying all cash," she said. "I'm already saving and am going to buy the gifts a little at a time and not do a lot of last-minute, expensive shopping."

Those wanting more information about Consumer Credit Counseling should call 1-800-966-3328.

HAVING CREDIT CARD REMORSE FROM HOLIDAY SPENDING?

*Presently, there is 4400 billion in oustanding credit carde debt in the U.S. Add to that figure an additional $150 billion that was charged in the 1996 holiday shopping season.

*70 percent of American consumers never reach a zero balance on their credit cards, choosing instead to "revolve" their credit.

*If you have $3,900 in a revolving credit balance, it will take 35 years to pay off that balance if you just pay the minimum monthly payment ($78) at 18 percent interest. That adds up to a whopping $10,000 in interest payments.

*It is estimated that it will cost American consumers $10 billion in costs passed down to them to absorb the current $1.1 million bankruptcy rate -- the highest rate ever.

How to make credit card repairs

*Put away the high-interest credit cards for a few months. Concentrate on paying off those balances by paying more than the minimum monthly balance. Use cash for purchases over the next several months.

*Designate your income tax refund, end-of-the-year bonus or extra income you may have for next year's holiday spending. Put money into a short-term money market certificate or savings account and don't touch it again until next year. Or, use extra money to pay off credit card balances.

*Gain financial control. Know exactly how much you owe and to whom. Know how much income you can rely upon to recover from the credit card crunch. If you worked overtime during the holidays, you will have that extra money at the beginning of the year. Make a list of income and what needs to be paid.

*Build a contingency fund. Put away money each month for expenses like car repairs, insurance and next year's holiday spending.

Source: Consumer Credit Counseling Service