When the Bills Come

Once you've spent the money and the bills arrive, you can still make your holiday dollars go further by paying your bills as quickly as possible. Credit cards generally require 2 to 3% of your current balance each month as a minimum payment. For a $1,000 balance, that's $25. But if you pay $25 a month at the average interest rate of 18%, you'll be burdened by this year's holiday purchases for the next five years! And you'll end up paying hundreds of dollars in interest on that $1,000.

The best way to avoid these charges is to pay by cash, check, or debit card, not credit card. Admittedly, however, that's not always possible. The next best thing is to pay off your entire credit card bill when it comes. But not everyone has a spare $1,000 lying around after the holidays. Even so, if you can pay $90 a month instead of $25, you'll pay off your balance within the year and save more than $400 in interest.

Another option is to look for offers of low-interest credit cards to which you can transfer your credit card balance. You'll save yourself a bundle if you pay off your $1,000 balance at 6.9% a year rather than 18% per year. But be careful. People who constantly juggle cards often get into financial trouble. And too many open and closed accounts may damage your credit rating.

Finally, if the best advice goes unheeded and you get in way over your head, consider contacting a debt or credit counseling agency such as Myvesta.org (www.myvesta.org) or National Foundation for Credit Counseling (www.nfcc.org). A good debt counselor can get creditors to stop collection efforts and help you work out a budget and repayment plan.