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NEW YORK -- The December holidays are just around the corner, and holiday shopping has now begun in earnest. At this time of year, according to consumer finance expert and law professor Karen Gross, uninformed consumers may be at risk of being victimized by several common financial scams that will come back to haunt them in the New Year--scams that will send them heavily into debt.

"Stores and credit card companies know that people are vulnerable during the holidays, and they take advantage of people's desire to give to their loved ones," says Gross, a professor at New York Law School and president of the Coalition for Consumer Bankruptcy Debtor Education. "But, remember that your money is your money and you control it. A little education goes a long way; you can have a joyful holiday celebration and not get into financial trouble afterwards."

To help educate consumers on how not to fall into these financial traps and have a happier holiday season, Gross has highlighted the following top six holiday financial scams:

1. Watch out for credit card companies that raise your credit limit (without you asking) in anticipation of the holiday season, or offer you the opportunity to forego all payments until 2005.

If your credit limit is raised, this will enable you to purchase more; and if you do not have the money to repay, you will be creating additional balances that accrue interest. Raising your credit limit can also lower your credit score (a number or ranking used by lenders to determine how much of a credit risk you are). Also, foregoing payments until the New Year means the amount you owe continues to accrue interest, and you'll eventually have to pay that increased amount of interest.

2. Don't skip paying bills other than your credit cards as money tightens during the holidays.

These nonpayments can lead to an increase in the interest rate charged by your credit card company--even though you paid your credit card bills on time. A growing number of credit card agreements have provisions stating that if you fail to pay another creditor, such as a utility company, landlord, or student loan, your credit card company can treat this nonpayment as a default under your credit card agreement and can raise your interest rate to the default rate. This is a very high rate that will not be lowered immediately.

3. Keep track of payment due dates--not just the date itself, but the actual time of day payment is due--and grace periods on credit cards.

In the holiday bustle, it's easy to miss a due date, but this can result in your owing significant fees and penalties. Increasingly, credit card companies are shortening grace periods, and some companies charge interest from the moment you make your purchase, even though payment is not yet due. In addition, some credit card companies have a time-of-day cutoff for payments, and payments received after that time will generate a late fee which can run as high as $39.00.

4. Watch out for companies offering to help you pay your holiday bills and increase your available cash for holiday purchases by either "debt consolidating" through a new loan secured by your home, or transferring balances to a "better," lower-rate card.

Many people unwittingly convert unsecured debt into secured debt. This does several things: first, it may actually increase the amount of your debt and perhaps even your monthly expenses when points and fees are included. Also, swapping unsecured debt into secured debt strips the equity out of your home. And if you default on a home equity loan, you can lose your home.

Shifting balances to another credit card can harm your credit score. Another problem is that the new card may appear to have lower rates, but those rates often don't last, and you may cause the rate to increase if you make late payments. Plus, the new rate may only apply to balances transferred rather than applying to all purchases.

5. Be cautious with Internet purchases, even though they're convenient.

First, make sure you are using a secure Web site when you provide financial information, as identity theft is rampant at holiday time. Be extra vigilant about disclosing personal information, such as credit card or Social Security numbers, during the holidays. Next, be careful of Internet prices; they may sound affordable, but there may be high shipping costs, especially for rush delivery. Gift wrapping charges can also inflate the price. Make sure you know what these costs are before you click the "Purchase" button.

6. Watch out for stores that say "Pay nothing down! No need to pay anything until 2006! No interest charged!"

Sometimes stores inflate prices to compensate for the delay in receiving payment and providing a waiver of interest for a certain period. They may also require the bill to be paid by a date that doesn't correspond with your usual billing cycle. This could lead to your missing a payment, in which case the store cancels the terms of this great deal, and you get charged the interest after all. Also, be sure you have the financial ability to pay the actual purchase price when it's due. Big purchases with deferred payments may just be postponing a debt crisis.

"Don't be afraid to ask questions when you're making holiday purchases, and if you don't like the answers you're getting, just walk away and search for another alternative," says Gross. "Remember that if something looks too good to be true, it probably is; and don't let anyone convince you that 'it's worth spending a little more to show your family you love them' or 'this is a once-in-a-lifetime deal that won't be here tomorrow'."

About Karen Gross

Karen Gross is a professor of law at New York Law School, president of the Coalition for Consumer Bankruptcy Debtor Education, and a consultant for United Way NYC. She speaks frequently in the United States and abroad on consumer finance, economic literacy, and bankruptcy-related issues. She has conducted empirical and historical research on consumer finance and bankruptcy, worked with individual debtors as a volunteer lawyer at New York's Legal Aid Society, and written numerous scholarly articles. She is also the author of the book Failure and Forgiveness: Rebalancing the Bankruptcy System (Yale University Press, 1997), which won the Association of American Publishers' 1997 Business Management Award.

About the Coalition for Consumer Bankruptcy Debtor Education

The Coalition is a not-for-profit organization whose continuing mission is to assist consumer debtors who file for bankruptcy in understanding and improving their ability to manage their financial affairs. The Coalition brings together multiple constituencies interested in debtors' financial competence and the bankruptcy system; its Board includes consumer advocates, counselors, representatives of financial institutions, government officials, bankruptcy trustees, educators, and bankruptcy professionals. The Coalition oversees a pro se project in the Clerk's Office of the Bankruptcy Court for the Eastern District of New York and runs both debtor education classes at its Debtor Education Center and debtor educator training programs. Its Web site is www.debtoreducation.org.

Media are invited to contact Professor Karen Gross for additional information or to schedule interviews on consumer finance topics. Please call Edith Sachs at (212) 431-2187 or e-mail to esachs@nyls.edu.