As bills roll in, make plan for payments

As retailers rejoice about a robust holiday shopping season, consumers may soon regret the day they lost the rein on their credit cards.

Credit card bills from the holidays will soon start arriving in people's mailboxes or, more likely, in their inboxes.

The National Retail Federation has estimated that holiday spending will reach $451.5 billion, about 3.3 percent more than last year.

If that figure holds true — spending numbers through Dec. 24 won't be available until later this week — it would be the biggest increase since 2006, and the largest total since a record $452.8 billion in 2007.

Chances are you contributed to that increase, and chances are you used at least one piece of plastic to do so, although early reports showed that consumers were trying to cover gifts with cash this year.

If the bills get out of control, here are some tips from Ryan Deitchler, a certified credit counselor with Consumer Credit Counseling Service Inc. in Wichita.

* As credit card statements come in, spread them all out and take a look at the damage.

* Sort your debts by balance and interest rate. If you can, pay much more than the minimum payment on the higher-balance and high-rate cards and try knocking out some of the smaller-balance cards. That can be especially helpful if you have trouble paying on time because it gives you fewer payment dates to remember.

"Instead of making payments on six or seven accounts, you're making payments on two or three," Deitchler said.

* Keep track of due dates. If all your bills are due at the same time, call your creditor and see if you can change your cycle and due date.

* Avoid late fees. If you can't pay a lot, pay at least the minimum. Late fees add up fast and harm your credit, which will lead to higher interest rates.

* If you think you're going to miss a payment, call your creditor to let the company know. Hiding from your debts won't do you any good.

* Ask your creditors if they offer any hardship programs and whether you would qualify.

* Balance transfer offers might seem enticing, but they only will work if it's a new card and you're disciplined enough not to accrue more debt on the card, Deitchler said.

"The trick with the balance transfers is to know what the fees are," he said. "People chase those. A lot of the newer cards will have those introductory offers. Those can be all right. But you want to be careful because interest starts to accrue instantly." If the transfer fees are high, you might not make a huge dent on the debt.

Also keep in mind the credit limit of the new card. Maxing out a card will hurt your credit score. You want to keep your debt-to-credit-limit ratio low.

Now, with New Year's creeping up Friday, make some financial resolutions for next year's holidays.

* You know the holidays happen every year. Set a budget for gifts and stick to it. Put aside money each paycheck and watch it build. See if your bank, credit union or employers offers a Christmas Club savings account.

* Be disciplined about opening store credit card accounts. While 10 percent off sounds good at the cash register, most store credit cards carry high interest rates and low balances. That means two things — you will pay more in interest, and you likely will max out the card fast. On top of that, opening several accounts within a short time period — even just the act of applying for them — will affect your credit score.