The malls are decked with boughs of holly, and department stores herald a banner shopping season. But for many consumers, the financial picture looks out of tune.
As they hit the home stretch for Christmas, many American consumers are in trouble. Personal bankruptcies have hit record highs. Credit bills and delinquencies have soared.
Overall, American consumers have loaded their debt levels to a record $1.16 trillion. And this is the time of year when they add to the bill.
The pressure to spend is, for many, irresistible, and while most consumers control their spending, many don't.
According to a new study by the American Bankers Association, two-thirds of consumers start their holiday shopping without a budget, but a quarter say they'll spend at least $700. Studies also show that Americans spend about $100 more and take two to three months longer to pay off holiday debt than they expect.
Many consumers don't know when they've crossed into the trouble zone. But even when that happens, experts say it's never too late to dig your way out.
If you are in trouble, you are not alone. A record 1.3 million people will likely file for bankruptcy this year. Pushing them toward that precipice is a huge level of credit-card debt, double the 1990 level for an average household.
And as debt has soared, so have the financial problems that follow it. A record $4.45 billion of credit-card debt is more than 90 days past due from a 1.95 percent of card owners.
And those numbers come in one of the best economies in memory.
That concerns Jeff Sheets of the Consumer Credit Counseling Service in Kansas City, Kan. "If you have too many people living on credit, it's going to catch up with you. In a good economy, we don't see the impact of these trends for five or 10 years. What happens when we go through a recession?"
Compounding the problem: a drop in consumer savings. "Without savings, Americans must find other ways to bridge the gap between income and expenses when the times get rough. Unfortunately, it appears that more borrowing is fast becoming the solution to this problem," write James Medoff and Andrew Harless in their book, "The Indebted Society."
"Once you get in the cycle of using credit cards for Christmas," says Mr. Sheets, "it tends to continue, because the money you could be saving for next year is going to pay off debt." He sees people borrowing to maintain lifestyles when real incomes are stagnating.
Some experts are more sanguine. Lawrence Chimerine, an economist who consults for MasterCard, notes that much of the $1.16 trillion in consumer debt is not problem debt. The number includes higher mortgage debt, brought by an increase in home ownership. It also reflects greater use of credit cards paid off within a month.
Nonetheless, lenders push hard to give credit cards to more consumers, offering incentives from free airline miles to cash back for using them.
The average consumer will get 32 preapproved credit-card offers this year. "Individual banks are competing to be the card you carry," says Richard Jones at MasterCard. Consumer groups say those offers often go to adults with poor credit records or multiple cards, and to young people.
Among student-loan borrowers, 20 percent had at least four cards. The average undergraduate carried $2,226 of credit-card debt in 1996.
Industry spokesmen say the focus on delinquencies ignores the fact that 98 percent of credit-card owners pay their bills on time.
But the trend goes the other way. More bankruptcies, and more of Sheets's clients, now come from middle- and upper-middle-class neighborhoods than lower-income households.
"It's keeping up with the Joneses," Sheets says.
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