• by Fern Siegel , November 21, 2008

The stock market isn't the only thing in freefall. According to the Federal Reserve Board, Americans owe nearly $1 trillion in credit-card debt. To encourage holiday shoppers to restrain themselves, Consumer Reports unveiled its third public-education campaign about the pitfalls of debt.

On Monday, Nov. 24, it is running an ad in USA Today warning shoppers that there is no bailout for debt. A recent survey from the Consumer Reports National Research Center found that 12 million Americans are still in debt from last year's holiday shopping. This season, 38% of Americans will again rely on credit cards as much as or more than in December 2007.

To augment its print effort, Consumer Reports--which does not accept advertising--is also running online ads in personal-finance sites that highlight the company's "Tightwad Tod" blog: www.ConsumerReports.org/TightwadTod. To help people manage their money, the blog offers advice on getting good holiday deals--from layaway plans to navigating outlet malls. It's written by Tod Marks, Consumer Reports senior project editor, who has been tracking deals and scams for two decades.

"This campaign reminds consumers that Wall Street's bailout won't cover them this holiday season. If consumers overextend their credit cards, there won't be a rescue package waiting in the wings," said Jim Guest, president and CEO of Consumers Union, nonprofit publisher of Consumer Reports.

In 2007, Consumer Reports ran an ad in The New York Times noting that $8 billion in gift cards goes unused and ends up back in the pockets of retailers. The campaign called on retailers and the National Retail Federation to eliminate expiration dates and service fees. An ad in 2006 advised consumers to skip extended warranties; following that campaign, the Consumer Electronics Association reported that consumer interest in purchasing extended warranties fell 20%.

To help Americans this year, Consumer Reports suggests paying in cash whenever possible--or relying on debit cards rather than credit cards, which do not carry interest charges. Credit cards are recommended if people are not carrying a balance and can pay off bills each month. Otherwise, consumers risk paying interest rates of about 12% to 13% on their balances.