Holiday spending can bring credit woes Consumers are urged to budget for gifts

November 27, 1997|By Samantha Kappalman | Samantha Kappalman,CONTRIBUTING WRITER

Every year at this time, millions of consumers get into financial trouble by being unable to resist overspending on holiday gifts.

But once the bills start arriving, credit management companies are swamped with desperate calls for help.

Columbia-based Genus Credit Management started a holiday hot line yesterday with the purpose of educating consumers against overspending and counseling them on how to budget for the holiday season. In addition to helpful hints, the firm provides an interactive service that tells consumers how much they can spend based on monthly expenses and income, which the caller enters into the system.

Mike Morency, vice president of sales and marketing for Genus, said the company has provided consumers with a budgeting service and ways to climb out of debt for the past five years. He said it has tried to tell consumers that gifts cannot be bought on regular monthly budgets and that purchasing on credit is fine as long as the balance is paid off in a timely manner.

Consumer Credit Counseling Service of Maryland and Delaware helps pick up the pieces of consumer credit in the aftermath of holiday season spending. Linus Campbell, director of education and marketing, said consumers most often seek advise in February and March -- when the bills for holiday spending start coming in.

"Historically, December is a very slow month for the Credit Counseling Service. Consumers are too busy using their credit," Campbell said.

Morency said Genus receives 25,000 calls a month before and during the holidays, but in January, that increases to about 30,000.

"The increase is because people are spending in December and don't have to acknowledge what they spend until the bills come," he said.

Both Genus Credit and Consumer Credit are non-profit organizations. Part of their debt management programs involves collecting money and turning it over to lenders, from whom the companies receive up to 15 percent of the amount collected. This commission is tax-deductible for the creditors.

Genus Credit was founded in 1992 when the company's president, Bernaldo J. Dancel, noticed that people needed help with their financial problems.

"He made it easy by letting them get assistance over the phone so that they are not uncomfortable," Morency said.

Campbell said that every year the counseling service tries to get the message out before the holidays. He said before spending begins, consumers need to sit down and create a budget.

"Try to limit what you put on credit cards and make sure that the credit cards you're using have low interest rates and late fees," he said.

Pub Date: 11/27/97

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.