It's a 'cash Christmas' for many shoppers this year

One very traditional type of Christmas card -- the plastic kind used for buying things on credit -- has fallen from favor with many American consumers this holiday season.

The trend is apt to bring more cheer early next year, when credit card payments fall due long after the Christmas presents are opened.

"All too often, people buy gifts for friends and relatives without figuring out how to pay the bill," says Jerry Lareau, president of Consumer Credit Counseling Service in New York. With social security taxes rising next January and inflation still at a high level, he worries that consumers will have a tough enough time "making ends meet in 1981 without trying to pay off lots of credit card bills."

Fortunately, financial analysts see plenty of evidence that consumers are not about to go overboard in their spending this Christmas. This does not necessarily mean that holiday retail sales will be off, just that more purchases will be made with cash instead of credit.

"People are very conservative and cautious about going into debt right now," says Robert W. Johnson, director of the Credit Research Center of Purdue University. He points out that total consumer debt for installment purchases in the United States is about the same as it was a year ago -- a marked change from the rapid growth of debt the previous year. Also, the outstanding debt on bank credit cards, including Visa and MasterCard, is actually slightly less than a year ago.

"People are just not using credit cards as much as they used to," says Spencer Nilson, Los Angeles publisher of a financial news letter. He reports that for the first time in the 30 years he has been tracking the credit card industry, the number of cards in circulation in the United States has declined -- from an estimated 542 million last year to 530 million today.

One contributing factor has been the lingering effect of the credit controls imposed last march by President Carter, but since lifted. The controls forced many credit card issuers to raise their interest rates, charge annual service fees, and be much more selective in issuing new cards. Interest rates are now as high as 24 percent in some states and annual fees typically range from $10 to

However, some analysts feel this federal action only accelerated the consumer retrenchment that was already under way.

"The notion that Americans just spend more and more until someone stops them is wrong," asserts Dennis Dumler, a vice-president with Colorado National Bank. Mr. Dumler says the recession, the high rate of inflation, and stagnant incomes have made consumers adjust their spending more so than the credit control.

Colorado National Bank has about $1 million Visa and MasterCard customers, and Dumler says on average they are using the cards less and accumulating less debt this year.

Still, the broad economic trends that are making many consumers more wary of debt are also making it more difficult for some to pay off their bills.

American Bankers Association reports that the delinquency rate on loans that are at least 30 days overdue was higher this fall than during the same period last year on bank credit cards, as it was on all consumer installment loans. Financial experts see this as a direct result of the recession.

Mr. Lareau of the Consumer Credit Counseling Service remains concerned that even with more prudent spending this Christmas, many consumers will find they have spent more than they could afford. "A lot of people don't recognize what inflation is doing to their buying power," he says.

Lareau counsels clients not to buy anything on a time payment plan that extends beyond 12 months. He encourages making a list of Christmas gifts before going shopping to avoid impulse buying. And he says keeping a copy of all your credit card receipts and looking at them each time before going shopping -- as a reminder of future bills -- is also a good idea.