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MOUNTAIN VIEW, Calif., Dec. 11, 2001 - Against the backdrop of an uncertain economy, many Americans are heading to Main Street and the malls, armed with credit cards and facing some tough decisions about their holiday spending. Singing harmony to the merchants' piped-in Christmas music this year is Washington, D.C.'s rally cry calling for patriotic spending. Throw in a little "Christmas comes but once a year," and a recipe for careless overspending might be in the making.

According to the American Bankruptcy Institute, consumer bankruptcies have risen to a record high this year with more than 1.3 million new bankruptcies filed during the 12-month period ending September 30, and nearly 350,000 new bankruptcy filings during the third quarter alone.

"Credit cards are convenient and safe, but too many people are seduced by the power of easy credit, especially around the holiday season," said William Norton, a bankruptcy lawyer at the law firm of Boult, Cummings, Connors & Berry, PLC, in Nashville, Tenn., and managing editor of a number of books about bankruptcy, including Norton Bankruptcy Law and Practice, 2d, published by West Group. "Armed with a little basic information, almost anyone can more effectively manage their credit and debt load."

The legal information web site FindLaw (www.findlaw.com) offers the following suggestions for taming your credit cards this holiday season:

Read the entire credit card agreement.

Your card's low interest rate may skyrocket after a short introductory period, and rates may be subject to change without notification. Use a credit card with a low interest rate and one that doesn't charge late fees. Don't be afraid to call your lender if you get a better offer from another credit card company and ask them to match it.

Live within your means.

It's infinitely easier to bury yourself in debt than it is to dig yourself out. Developing a family budget and shopping with a list are excellent starting points for smart spending.

Make more than the minimum payment.

When closing on their first home, most people are shocked to find their 30-year mortgage will have them paying well over twice the current market value of the house during the term of the loan. Many credit cards use payment schedules similar to a 30-year loan but with higher interest rates. Consequently, consumers could be paying for that too-good-to-pass-up sale item for years to come, finally paying it off at many times its face value, and long after the item has been discarded. Also, simply making the minimum payment usually doesn't lower the balance much, which could lead to new, or exacerbate existing, credit problems.

Mail payments early.

Being late on your payment could cost you big down the road. A late payment could trigger a hefty late charge or a higher rate of interest. Your lender might see a late payment as a signal of financial problems and raise your minimum payment, and late payments also are a negative on your credit report. To a potential creditor, they are the most significant blemish on a credit report next to a foreclosure or a write-off. If you are going to be late on a payment, call your lender and let them know.

Know your rights.

Carefully read your statement for inaccurate charges. The Federal Truth-in-Lending Act requires that lenders investigate contested charges and report back to the borrower. The charge will be removed if the merchant fails to prove that the cardholder made the purchase. Consumers can visit free legal information Web sites like FindLaw (www.findlaw.com) for information about personal finance and credit, or for help finding a lawyer.

"If improving your financial situation is on your list of New Year's resolutions for 2002, implement it a little earlier this year and start the new year off right," said Norton. "Managing your spending around the holidays may be the best gift you could give to your family and friends."

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