THE CREDIT CRUNCH

Before year's end, as many as 1.3 million people will have filed for bankruptcy.

The major reason? credit card bills.

That 1.3 million figure is a conservative estimate based on 1997 figures. Bankruptcy figures have risen annually since 1993 and now total about 400,000 more than in 1994.

For a perspective, look back more than a half-century to 1948 when there were only 8,385 bankruptcy filings.

The relationship between bankruptcy and credit cards is a solid one, say economists. It is the reason most often cited in bankruptcy filings, greater by far than job loss, medical bills, divorce, taxes or legal bills.

Consumers' Research Magazine explains it.

Consumer credit outstanding in the United States has reached the unprecedented level of $1.23 trillion, reported the magazine recently. Credit card debt alone amounts to $528 billion of that total.

During the period, 1989 to 1995, families using credit cards for borrowing rose significantly, to 48 percent, according to a survey by the Federal Reserve Board.

Both balances and credit limits have increased. In 1992, the median balance on bank cards was $1,100. During a three-year period, the median balance rose to $1,500. During the same span of time, the median total credit limit of cards rose from $5,400 per cardholding family to $9,000.

The delinquency rate on credit cards has also risen, from 3 percent to 3.7 percent. This is based on card accounts that were past due 30 days or more.

While some blame credit cards for drawing consumers into debt, there are other reasons for the increasing bankruptcy trends. These include large uninsured medical expenses, divorce with financial pressures on a divided family, business failures, unemployment in certain regions, other family crises and gambling.

Millions of Americans have turned to organizations for help with their credit card woes.

One of those organizations is Consumer Credit Counseling Services, a non-profit agency that collects delinquent debts for creditors.

"The current national credit card debt of over a half-trillion dollars is the highest ever," said Patricia Soileau, branch manager of Consumer Credit Counseling Service in Cape Girardeau. "With people expected to spend about eight percent more this holiday season, that debt could increase."

The interest rate on many credit cards is high, and over a period of time, that translates into a lot of dollars for interest.

Consumer Credit Counseling, headquartered in St. Louis, offers help for people who have dug themselves into a credit hole. The organization, said Soileau, takes clients at no charge and helps them work out a budget, based on the client's cash flow.

"The first thing we require them to do is cut up their credit cards," Soileau said. That can be an unsettling thing for a lot of people who have come to rely on the card.

After the cards are destroyed and budgets are worked out, clients make monthly payments to CCCS, which makes payments to the creditors. Additional information concerning Consumer Credit Counseling is available by calling the local CCCS branch.

CCCS offers a number of suggestions for budgeting, saving and making wise spending decisions, said Soileau.

-- Put away high-interest credit cards for a few months and concentrate on paying off those balances by paying more than the minimum monthly payment.

-- 70 percent of American consumers never reach a zero balance on their credit cards, choosing instead to "revolve" their credit.

-- Designate any income tax refund, end-of-the-year bonus or extra income you may have for next year's holiday spending. Or, use extra money to pay off credit card balances.

-- Budget. Gain financial control. Know what you owe and to whom.

-- Encourage children to handle money responsibly.

-- Build a contingency fund. Put away a little money each month for unexpected expenses.

-- Encourage alternatives to spending money for gifts -- birthdays, holiday shopping, other special events.

One approach to spending money on gifts is for children to make homemade gift certificates or "coupons," redeemable for such things as washing the car, doing the dishes, cleaning their room, doing errands or other tasks.

People in Cape Girardeau, Southeast Missouri and the entire state have their share of credit card woes, said Soileau. It reaches people in all walks of life -- low income, medium income and the wealthy.

"The more people make, the more they spend... and, charge," she said.