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Reading the warning signs and averting money problems

Christmas generosity can draw you into a pool of debt if you're not careful. How do you know if you're nearly over your head? Here are some warning signs. You open your credit card bill and focus on just the minimum payment due. ``That's a good sign you're right on the edge,'' says Elgie Holstein, director of Bankcard Holders of America, Washington, D.C.

You start applying for lots of credit cards, many of those offered through the mail, to spread your payments over several creditors. ``When you start picking and choosing,'' says Donald Badders at the National Foundation for Consumer Credit, Silver Spring, Md. `You may be getting into trouble.'' An unexpected payment or an emergency can upset a delicate juggling act.

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You use the cash advance on some credit cards for necessities, like food, pharmaceuticals, and clothing, or to pay off other credit cards. Because many advances carry an interest rate of 18 percent starting from the moment you draw the money - there's no 30-day grace period - that's a very expensive loan.

If you fit this description, you have plenty of company. Last year the National Foundation for Consumer Credit helped 154,000 clients. About half needed the foundation to serve as an intermediary with their creditors; the rest just wanted guidance in planning a manageable budget.

Here are some things the foundation and others recommend to keep you solvent:

Work out a Christmas budget and stick to it.

If you're in financial difficulty, ``inform your friends and family, and decrease the amount you'd spend, or forgo presents altogether,'' says Mr. Badders. A little embarrassment is better than bankruptcy.

You can pay cash, do that. It may be easier, however, to exchange or return gifts that were purchased with credit cards.

If you do use credit cards, choose your cards carefully. ``Using department-store cards should be your last choice,'' Mr. Holstein says, ``because they tend to charge the highest interest rate, usually over 20 percent. A low-interest card, a Visa or Mastercard, is a better choice.''

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For big-ticket items, consider a home equity or personal loan, which have low interest rates right now, Holstein says.

If you want some inexpensive help, you can look up Consumer Credit Counseling Services in the telephone book, or contact the national foundation (301-589-5600) for the nearest counselor.

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