Holiday

Holiday debt is coming soon to a mailbox near you, and this year's hangover promises to be a big one for some.  "Consumers are feeling a definite pinch," said Curtis Arnold, founder of U.S. Citizens for Fair Credit Card Terms.

Among the factors pinching consumers:

Spikes in the cost of gasoline and home-heating oil.

A doubling of minimum credit-card payments.

Continuation of the dreaded universal-default charge, in which one card issuer increases a borrower's interest rate because the customer was late on a payment to another lender.

Americans spent $438.6 billion this holiday season, which translates to about $738 per person, according to the National Retail Federation. At the same time, credit-card debt has soared to all-time highs. Although holiday spending only makes matters worse for many, one local credit counselor said more people are coming in before they start missing payments.

"We're seeing an increase in clients this month, but many of them are not behind yet," said Kevin Williams with Consumer Credit Counseling Services of Greater Fort Worth. "The majority of people I'm seeing are taking a proactive stance."

That's a positive sign for financial education as consumers begin to get better at identifying storms looming ahead. But at the same time, Williams said he's seeing much higher credit-card balances and interest rates among his clients. "I've been seeing balances of at least $15,000 and interest rates between 16 percent and 30 percent," he said.

With bankruptcy out of the picture for many after the change in the law last year, there are still several steps that consumers facing credit-card debt can take to get over their holiday hangovers, said Howard Dvorkin, founder of Fort Lauderdale, Fla.-based Consolidated Credit Counseling Services.

"You start by going back to the kitchen table, where all great financial decisions are made," he said.

"Sit down and figure out where you are -- most people don't even know what they bring in and what they owe -- then figure out where you're going."

IN THE KNOW - Steps to get rid of holiday debt

Stop using those cards. Try to use cash to pay for food, clothes, utilities, rent or mortgage and other needs until you pay off your holiday debt.

Figure out what you owe. Whether on paper or a computer spreadsheet, calculate how much you owe on each card and the annual percentage rate. Then create a monthly budget to show what money is coming in and what is going out.

Make a repayment plan. Figure out how much money you can devote each month to pay down your holiday debt. Set a big goal -- for example, three years to pay off all your debt -- then see how much it would cost each month. Pay off the credit cards with the highest interest rates first. Look for ways to shave expenses. For help, go to the U.S. Treasury Department's Web site, www.mymoney.gov, and look at its 66 Ways to Save Money guide.

Call your creditors. Explain to them why you can't make your payments and try to work out a plan that reduces your payments to a more manageable level.

Renegotiate your interest rate. If your credit-card company turns you down, call a competitor and see about getting your debt transferred to a better deal. For the best deals, go to www.cardratings.com, by U.S. Citizens for Fair Credit Card Terms.

Create a plan for the 2006 holiday season. Plan for the next holiday season by opening a savings account. Use last year's expenses as a starting point for what you will need this year. Consider ways to shave costs, such as giving homemade gifts or cutting down on entertaining.

Helpful Web sites. To find a credit counselor and answers to other personal finance questions, check out www.mymoney.gov. For a good primer on credit-card debt, go to MasterCard's www.debtknowhow.com or Consolidated Credit Counselor's www.consolidatedcredit.org