Holidays
Consumers are feeling the pain of holiday spending, but it can be eased.
Bethany Clough
The Fresno Bee
The holidays are over and the hangover has begun.
It's called a "debt hangover" in the credit counseling industry. It refers to the shock and depression that happen sometime after Jan. 20, when the credit card bills start rolling in with the total charges of all those gifts.
Business normally increases by 50% this time of year at ByDesign Financial Solutions in Fresno, said Executive Vice President Martha Lucey. But this year it's doubled, mainly because homeowners are struggling to pay their mortgages on top of their holiday bills, she said.
Variable-rate mortgages with rising interest rates and interest-only loans in which homeowners are starting to pay back the principal are putting the squeeze on residents.
Americans racked up a total of $85.6 billion on major credit cards during the five weeks before Christmas, according to Cardweb.com, a credit card information service.
Uriel Campos, 22, of Parlier put $800 on credit cards buying Christmas presents for his 1-year-old daughter and 4-year-old son.
"I used it all Christmas long," he said of his credit card. "It's expensive, but it's worth it. It's all about the holidays."
He expects to pay it off in a few months, but others won't be as lucky.
The average household already owed $9,159 before the holidays, according to Cardweb.
If your credit card bills are getting out of control, there are steps you can take, according to ByDesign, Consolidated Credit Counseling Services, Inc., and Patrick Ritchie, author of "The Credit Road Map."
They include:
Pay up. Pay your bills as soon as they arrive to avoid late fees or over-limit fees, ByDesign says. Tackle highest interest-rate cards first, but pay the minimum on everything.
Ask for help. If you can't pay the minimum, call your credit card company, Lucey says. Many allow you to negotiate your next payment or have reduced-interest rate programs for customers who are struggling.
If that doesn't work, get help from a reputable credit-counseling agency. Many offer free or low-cost advice.
Remove the temptation. Visit www.optoutprescreen.com to opt out of preapproved credit card offers, recommends Ritchie. Consumers can opt out for five years or permanently, with the chance to re-enroll.
Use your gift cards. If possible, use your gift cards for everyday items, especially ones in which cards can be used at multiple stores. Put the cash you would have spent on necessities toward bills.
Sell that Christmas sweater. Got a gift you don't like? Don't regift it, sell it, recommends ByDesign. Try Web sites such as Craigslist, eBay or Froogle. Just don't shop while you're online.
Scour your bill. Review every purchase, recommends ByDesign. The holidays are ripe for identity theft and fraudulent purchases. If something doesn't ring a bell, call your credit card company and dispute the charge.
Switch cards. Check into transferring your balance to a credit card with a lower interest rate, says Consolidated Credit Counseling Services, Inc. Beware of cards that offer a limited "introductory" interest rate that skyrockets when the time period is over.
Hide the plastic. Put away all of your credit cards until they are paid off. Once they're paid off, promise yourself not to make any more purchases unless you can pay them off in 90 days.
