EXPERTS ADVISE CREDIT CAUTION

When the season of giving is bankrolled by Visa, MasterCard and Discover, Santa Claus sometimes goes overboard.

MasterCard and Visa have reported record spending since Thanksgiving, increases of up to 25 percent.

American consumers already owed $324 billion on their credit cards before the latest binge, an amount that has increased by $4 billion monthly during 1994.

"There's no reason to expect it's going to go down during the holiday season," says Ruth Susswein of the Salem, Va.-based Bankcard Holders of America.

In fact, Americans traditionally rack up 30 percent of their credit card purchases during the holidays, putting smiles on merchants' faces.

"It's fine for right now." says Susswein, executive director of the nonprofit consumer group. "Come January, we've got a problem."

Seventy percent of consumers don't pay off their credit card charges in full the following month. Paying a non-tax-deductible 9, 15 or even 20 percent interest on credit card balances while earning only a taxable 3 percent on savings is a losing game, Time magazine's Andrew Tobias advises.

He says if you can't pay off the balance monthly, "cut up the card."

Paying off charges monthly and cutting up cards are cardinal rules around the Consumer Credit Counseling Service, a nonprofit organization that promotes the effective use of credit by providing free counseling and education.

"A credit card is a short-term debt instrument," William Holly, manager of the CCC Cape Girardeau office, says flatly. "You buy this month and you pay off next month."

Paying only the minimum charge is a red flag that you are mismanaging your credit card, Holly says.

Many people do know how to stay within their budget at Christmas, Holly says. "Other people say, I got into trouble with a card because I tried to be Mr. Big at Christmas."

The CCC recommends that consumers spend no more than 1.5 percent of their gross income on the holidays.

That figure was arrived at by a national foundation for consumer credit.

"It was arrived at by working with committees of financial institutions and people who have looked at spending habits."

Other CCC suggestions:

-- Make a Christmas budget. Make a list and set a spending limit for each person on it.

-- Don't buy compulsively, especially in the last-minute rush. Determine what you want to buy before you get to the store.

The CCC can be reached by calling (800) 966-3328 or (314) 7050.

MasterCard projects each consumer will spend $486 this holiday season, an increase of $63 over 1993, figures that should make merchants happy.

"People are feeling good," Susswein says. Before, people were unsure about their finances.

"Some people believed it to be a pent-up demand... but not as many people feel they're in danger of getting laid off this year," she says.

Those who don't or can't pay off their balance at the end of the month can benefit by switching to one of the lower variable-rate cards that have been offered during the past year, she says.

"They're called teaser rates because they go back up," Susswein said. "But they are worth taking advantage of if they last a year or more."

Bankcard Holders of America offers a list of low-interest credit cards. It can be obtained by sending $4 to: 524 Branch Drive, Salem, Va. 24153.

The lowest interest rate currently available is 6.4 percent, which requires sterling credit.

A pamphlet offering practical advice on how to qualify for a low-interest loan is available for $1 more.

Credit cards can be helpful as long as they're used wisely, Susswein says.

"If you pay the bill off in full, you can get an interest-free loan. Somebody else paid the bill and you didn't have to."

Susswein's holiday-spending advice: "Spend the money you have, not the money you hope to earn in '95."