CR Warns of Holiday Credit Card Debt

A new ad campaign from Consumer Reports is directed at holiday shoppers and warns consumers-There is no bailout clause in your credit card agreement.

CR Warns of Holiday Credit Card Debt

Latest holiday campaign

Here at Auto Credit Express, we wanted you to be aware of the latest personal finance education campaign from Yonkers, New York-based Consumer Reports Magazine.

In its latest holiday consumer campaign, Consumer Reports wants to remind holiday shoppers that although credit cards offer the most protection for consumers, “There is no ‘bailout clause’ in your credit card contract,’ and you could end up paying 12 to 13 percent or more if you don’t pay off your balance each month.

According to the magazine, the Federal Reserve Board shows that Americans owe in excess of $1 trillion in credit card debt. In a recent survey from CR’s National Research Center, 12 million Americans are still paying off last year’s holiday bills (ouch!) and as if that weren’t enough, 38 percent of us plan to use credit cards as much (35%) or more (3%) than last year.

An online and print-based ad campaign will run in conjunction with the launch of their “Tightwad Tod” blog series from their Senior Project Editor Tod Marks. Marks’ topics will cover a wide range of issues – from snagging a holiday job to successfully navigating outlet malls.

“This campaign reminds consumers that Wall Street’s bailout won’t cover them this holiday season. If consumers over-extend their credit cards, there won’t be a rescue package waiting in the wings, so they need to remain vigilant about spending within their budgets,” said Jim Guest, president and CEO of Consumers Union (nonprofit publisher of Consumer Reports). “As an organization that doesn’t take advertising, we’re using this venue as a way to educate consumers and foster marketplace change.”

Holiday Shopping Tips

According to CR, here are the best ways to avoid getting mired in holiday debt and, at the same time, maximizing payment methods:

Cash. Consumers should use cash as much as they can. There’s no fear of identity theft, and it’s accepted almost everywhere. Remember to save the receipt for evidence of payment.

• Checks. Write a check if you need to make a large purchase somewhere that won’t accept credit or debit and you don’t want to carry cash. Canceled checks can also be useful as receipts or for tax purposes. If a check disappears, you can stop payment on it, if you act quickly enough (checks are increasingly being processed in a single day).

• Debit cards. Use a debit card when you don’t mind having the money withdrawn immediately from your checking account. Debit cards are a surefire way to avoid onerous credit-card interest charges, but you could be slapped with burdensome overdraft fees if you don’t have enough money in your account to cover your purchases. With a debit card, your liability for unauthorized transactions is limited to $50 if you report the problem within two business days of discovering it. After that the limit leaps to $500. Beyond 60 days of your account statement you could lose all the money in your bank account.

• Credit cards. Use a credit card for most large purchases, if you’re not carrying a balance and can pay off the bill each month. Credit cards offer greater protection than other forms of payment. If you don’t pay off your purchases each month, you’ll pay interest rates of about 12 to 13 percent on your balance, depending on whether your card has a variable or fixed rate. If your account number falls into the wrong hands, you’re liable for only the first $50 in charges, and most large issuers waive liability altogether. If you have a legitimate beef with a seller, it’s relatively easy to have the charges removed until the dispute is settled, if you report the matter to the issuer within 60 days after the charge appears on your statement.

The Bottom Line

With the holiday shopping season nearly upon us, it’s time to take a hard look at past spending habits – especially considering the current state of the economy – both national and personal. A few preventive measures taken now could eliminate bigger financial headaches later on.

Posted on November 24, 2008 by in Uncategorized
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