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ALEX COHEN, host:

From the studios of NPR West, this is DAY TO DAY. I'm Alex Cohen.

MADELEINE BRAND, host:

I'm Madeleine Brand. Coming up, author Naomi Wolf says America is heading towards fascism.

COHEN: But first, soaring energy costs and a slowing economy maybe making holiday shoppers say humbug. That's according to a new survey out today. Joining me now is Bill Hampel. He is chief economist for the Credit Union National Association, one of the study's sponsors.

And first of all, can you tell us how many consumers say they're going to spend less this holiday season and how much less might they be spending?

Mr. BILL HAMPEL (Credit Union National Association): This year, 35 percent of our respondents said they were going to cut their spending compared to last year. And that number is up from 32 percent last year and only 30 percent the year before. They didn't tell us how much they're going to cut their spending, but we've done the survey for eight years in a row and this is the weakest response we've gotten from it.

COHEN: And why do you think that is?

Mr. HAMPEL: Gasoline prices and home heating costs. Far and away, when we asked people why - what's going to be driving and affecting their spending this year, it was rising energy prices.

COHEN: What else is factoring into that equation? It seems like we hear this message every year, that people are going to be spending less. Is there something besides gas that's different this year?

Mr. HAMPEL: The general feeling about the economy right now among consumers is the weakest it's been in quite some time. Consumer confidence is soft and consumers have started to realize they need to start saving. And if they cut back on holiday spending, it's one way they can save.

COHEN: And what does this mean for retailers?

Mr. HAMPEL: For retailers, I don't think it's going to be a completely dead season, but it's going to be a disappointing season. Last year was a little weaker than the year before. This year's going to be a little weaker than last year.

COHEN: Mr. Hampel, anything else from this year's survey that struck you as being a little bit different, something worth noting?

Mr. HAMPEL: We asked a series of questions about people's attitudes toward debt. And their concern about their ability to handle their debt is actually lower this year than it has been the last couple of years. This is a bit surprising, given the fact we have the subprime crisis and a few people having really significant difficulties with their mortgage loans. I think what's going on is that a few people have severe debt problems but most people are managing their debt fairly well.

COHEN: Bill Hampel of the Credit Union National Association, thank you so much.

Mr. HAMPEL: Thank you.

BRAND: Okay. So Bill Hampel says most people seem to be handling their debt fairly well. We asked producer Sky Rhode to do a reality check with some shoppers in Glendale, California. She talked to people about how they're planning to finance their holidays.

Ms. CHRISTY WALKER(ph): Christy Walker from Glendale. I know I've been going overboard a lot the past years and I want to try and cut that back and I want to start making more things for people rather than buying stuff - commercial stuff. I use credit cards or just my checking account.

Ms. EDNA KERENSKI(ph): I'm Edna Kerenski from Glendale, California. I normally set a budget and I really try to stick within it. But sometimes when you get into the store, it's kind of hard to stay in the budget. Actually, for this year, believe it or not, it is less. And some of it is just based somewhat on the economy and also in relation to what I do. And I'm not certain what might happen in the future so I'm trying kind of keep it low this year. Generally speaking, I'm spending between probably four or five hundred dollars. And that includes family and friends. I actually do have some savings and unfortunately I just kind of take it usually from my debit card. It just seems easier that way.

Mr. ROLANDO BOHERKIS(ph): My name is Rolando Boherkis. I live right here in Glendale. I'm with the Credit Union and they usually have like special loans for people that, you know, like to take out extra cash for the holidays. So I'm thinking of doing that. Like overall, probably spend like maybe 2,000 more for this year, you know, which, to me, isn't that bad.

I'm not old fan of credit cards. I have one for emergencies and that's it. I don't, you know, if I could pay it off, then I do. But for the most part, I just avoid credit cards as much as possible. Yeah.

Mr. GARR GORDON WILSON(ph): My full name is Garr Gordon Wilson, and I'm from Glendale, California. I try not to do anything that would shoot myself in the financial foot. I think I will likely be spending less. I'm currently living on disability insurance and it puts a kind of an absolute break on expenditures.

Ms. KEENA MANUKIEN(ph) (Resident, Glendale): My name is Keena Manukien. I am live in Glendale. I wish I would have able to spend more than last year. I really love to spend. If I cannot afford to spend, oh, it's too bad. But sometimes I used credit cards but because of the high interest and charges, I don't like it.

BRAND: Of all the people our producer spoke with this weekend, only one of them was planning to finance the holidays with plastic. That is pretty unusual for our credit card-addicted society. Take these facts. As of 2004, and that's the most recent year with the data available, the average household owed $5,219 on credit cards. Credit card debt has increased 315 percent since 1989. Ed Mierzwinski is with the U.S. Public Interest Research Group; it's based in Washington, D.C. Welcome to the program.

Mr. ED MIERZWINSKI (U.S. Public Interest Research Group): Hi, glad to be there.

BRAND: So you've studied Americans and their credit card debt and you found that people are actually using credit cards not just for flat screen televisions but to buy the basics. Is that new?

Mr. MIERZWINSKI: Increasingly, people are using their credit cards for day-to-day expenses, not just the big ticket items or the vacations they typically used them for in the past. They've been encouraged by credit card rewards, number one, and number two, just by a lack of buying power of their own, to put more things on their credit cards.

BRAND: And is that because wages, in real terms, have not kept pace?

Mr. MIERZWINSKI: I think that's exactly right. There are - no question, there is a large group of Americans - generally, upper or middle class Americans - who use their credit cards for convenience. They get the miles and they pay the card off every month. Those Americans have zero balance on their credit cards. But about half of Americans carry a balance, and that balance is between five and ten thousand dollars, depending on whose studies you're looking at.

BRAND: And what about this fairly recent trend of people taking out home equity lines though a credit and using that? And now that that credit is tightening, are people now turning to they're credit cards more than ever?

Mr. MIERZWINSKI: We all expect that as home equity and credit tightens - because that part of the business, all of the foreclosures and mortgage problems in the economy tighten up - that people will be switching their debt over to credit cards and credit card balances will increase again.

BRAND: And credit cards obviously have higher interest rates, so that's another problem.

Mr. MIERZWINSKI: Credit cards have much higher interest rates than any other form of credit other than something like payday lending. It's shocking to people who don't look at their credit card bill that if they missed a payment or even utilized their credit card too much - that is, where more than 50 percent of their limit - their credit score could have declined and the bank could have used that as an excuse to raise their interest rate. So some people have no idea that they're paying 25 or 30 percent APRs.

BRAND: Wow, 25 to 30 percent interest?

Mr. MIERZWINSKI: Even higher than that. There are credit card companies that impose a penalty interest rate of 35 or 36 percent APR if you miss a payment or miss two payments, either to that company or in something called universal default, miss the payment to a separate creditor, even though you've always been on time, and as agreed with the credit card company. And by the way, we're not only talking about the fly-by-night acme brand credit card companies. We're talking about some of the biggest banks in the country imposing these Draconian terms on Americans.

BRAND: That's consumer advocate Ed Mierzwinski. He's with the U.S. Public Interest Research Group. Thank you very much.

Mr. MIERZWINSKI: Oh, thanks very much for having us on the show.

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