With the holidays fast approaching, many will find themselves wondering, "How am I going to pay for it all?" The easy solution screams from within your wallet -- our hands are always itching to pull out those plastic cards and their tempting promise of guaranteed purchasing power. But keep this in mind: in the spirit of giving, you could be doing yourself a serious disservice.

The average American has approximately $8000 in credit card debt and spends nearly $1000 over the holidays. That's an eye-opener, considering that, in the not so distant past, credit cards were used only out of necessity. Today, using and abusing credit is a way of living, as well as a dangerous lifestyle that inevitably promises a future of increasing long-term debt.

To help counteract the damage done over the holidays, Harvey Warren, President of The National Consumer Council (NCC) -- a non-profit organization dedicated to a debt-free America -- offers some sage advice. "Make sure you pay more than your minimums or you'll be paying for this Christmas by next Christmas," he says.

Crunch some numbers and figure it out. Warren adds that even if a debt amount is much less than the national average, say around $3000, if you're only paying the minimum on an account where the APR is 20% -- which is a common APR for many - it would take 54 years to pay the card off. The added insult is that a large percentage of the payoff goes to the interest.

According to Warren, there are some other ways to help yourself, such as "making a budget and sticking to it. And always pay your bills on time or not only will it affect your credit rating, but the late fees will add up," he warns.

Common sense, it would seem, but Warren notes that most people in long-term debt trouble who come to his organization for help have no clue how much debt they are in. Holiday shopping environments can prompt people to shop spontaneously, and some who spot that perfect gift for a loved one might not even notice the price tag. But beware, if you fall delinquent on credit card payments, those well-meaning gifts could turn around and bite you where it hurts -- your credit rating. He also recommends that during the shopping craze of the season be sure to keep track of your credit limit and not to go over it; otherwise you will get hit with a big fine.

Warren also has a key piece of advice that many Americans might not be aware of:

"You can call your creditor and ask them to cut your rate," he suggests. If they do not comply, "shop your bank," Warren adds. "Banks are very competitive. Don't pay a huge interest rate just because you've had a long relationship with a financial institution."

But credit card debt is not just a seasonal problem -- its repercussions are more damaging than many realize. With a slew of offers in the mail and on the Internet sent to just about everyone from college students to senior citizens, it is no wonder that credit card debt has become a national disorder. Consumers are continually targeted with effusive claims of being "pre-selected" and "pre-approved" for credit limits well above their means. Consumers can also turn to consumer advocate organizations such as the National Consumer Council who work with corporations to help them make wise decisions.

Warren adds that anyone can call the NCC and get as much information as they want for free (the number is available at their website: www.thencc.org). They understand that many people are experiencing financial hardship and some type of relief is needed. The NCC's financial sponsors will fully educate callers on the consequences of the decisions they make.

If you find yourself in debt, it is important to realize that as a consumer you retain certain rights.
Warren explains what creditors cannot do, according to the Federal Trade Commission:

· Call you at work.
· Falsely imply that they are attorneys or government employees.
· State that you will be arrested.
· Threaten violence or bodily harm.
· Give false information about you to anyone, including credit bureaus.
· Misrepresent the amount of your debt or the legal nature of any mailed paperwork.
· Cash post-dated checks prematurely.
· Falsely indicate that they will seize, garnish, attach, or sell property or wages unless they actually intend to follow that procedure. It is unlawful to do so.
· Use obscene or profane language in their attempts to collect debt.
· Falsely imply that you have broken the law.
· Use the telephone to annoy you.
· Call before 8:00am or after 9:00pm without your consent.

Nothing helps so much as having all the facts. Especially considering that although the FTC, Consumer Affairs and the District Attorney are working together to protect consumers, "the unfortunate problem is that these companies are dealing with people who are highly emotionally stressed and that creates an environment for predatory practices," Warren explains. "If someone says they can fix your credit rating in 30 days, or that they can fix your credit without damaging your credit rating, hang up the phone," he adds. "They can't do it. It's a lie."

Warren notes that debt recovery normally stays on a debtor's record for three to five years, a big improvement over the 10 years your credit rating would suffer if you claim Chapter 7 bankruptcy. Although you can just walk away from your debt after claiming Chapter 7, there are some definite issues to consider, such as the fact that for 10 years no one will issue you a credit card, no one will finance you for a car or home, and it may affect your future employment.

The objective is to avoid bankruptcy, if possible, and to minimize the damage done to your credit rating. So, it cannot be stressed enough: educate yourself.

Ideally, credit card education should begin at an early age, way before eligibility is an issue. The NCC believes in raising public consciousness on financial literacy and works with a program called California Jump$tart Coalition for Personal Financial Literacy (http://www.cajumpstart.org/), which educates children K-12 on how to properly use money and working towards integrating practical life skills in the math curriculum.

So Warren advises that, before you fall for the line that memories involving baseball games, parking, hot dogs, sodas, souvenirs and more are "priceless", you should stop and reassess the situation. "When MasterCard says they are selling you memories that are priceless, they are anything but."

© Melt Magazine 2002