Expert: Treat Credit Cards Like Grinch

Christmas is six weeks away.

And if you plan to put your holiday purchases on credit cards, Dave Ramsey suggests you think about how long it will take to pay them off.

The financial author and radio host pointed out on The Early Show Tuesday that plenty of people get into a lot of credit card trouble this time of year.

He doesn't think anyone should put anything on a credit card, ever.

Last holiday season, the average credit card user put $626 worth of holiday cheer on his/her cards. Seventeen percent of shoppers racked up tabs of $1,000 or more. The National Retail Foundation says at least a third of all shoppers this season plan to use only their credit cards to make purchases.

Many folks take months to pay off their holiday bills and, thanks to interest, wind up spending more than they ever bargained for over the holidays. According to the American Bankers Association, most people say they'll be able to pay off their holiday charges in two or three months, but it actually takes them six.

Ramsey says, if you can't afford the holiday gifts you want to buy, you need to come up with cheaper alternatives. Get creative. It's the thought that counts! If that's upsetting, Ramsey asserts, too bad -- you won't care when you're debt free!

Letters for Ramsey pour into The Early Show, and he responded to a few Tuesday; all concern credit card debt.

CATHY FROM OHIO writes, "We are $52,000 in credit card debt. Should we get a home equity to reduce the debt? Things are getting really tight, especially with Christmas coming. Please help."

Face facts now: Christmas is going to be limited for you this year, Ramsey said. Don't fool yourself into thinking you can afford things you can't pay for; it's not worth it. Cut up those cards so you're not tempted to use them!

A home equity loan isn't the answer to your problems. It's an appealing solution to many folks because the interest rate on them is frequently much lower than on credit card rates. However, Ramsey said, 88 percent of those who consolidate debt that way don't change their spending habits, and go into even more debt.

Instead, anyone in this situation needs to start paying off his or her credit card bills one at a time, starting with the smallest balance. Even if you manage to pay off a small debt of $200, you'll be amazed by how empowered you'll feel. It's like going a diet, Ramsey explained: That day you lose those first two pounds is a big one, and it encourages you to keep going for more!

DEAN FROM NEW MEXICO writes, "Dave, I am close to being debt-free. The issue is my wife. She spends money like Congress and, despite my every effort, continues to do so. She recently bought NFL Sunday ticket on Dish to the tune of $250. This is a wasted expense. Her response is that she works and earns money and her money is hers to do what she wants to with. How can I get her to knock this crap off? Help!"

Ramsey's answer may have surprised some viewers: He said the husband probably owes the wife an apology! His guess is that this guy is a super tightwad and is more than a bit controlling when it comes to the family finances. His wife is probably engaging in some rebellious spending right now. She feels abused by his process for getting out of debt. There's also a chance that she's a bit of a princess and simply wants what she wants.

Either way, this couple will never get and stay out of debt unless both spouses are on board. If one of the two doesn't want to cooperate, they may have a marriage problem, not a money problem. According to Ramsey, Dean needs to try to lighten up a bit when it comes to saving and spending money. He also needs to persuade his wife that her feelings on this are important, and she does have a real vote in how they attack their debt.

JIM writes, "I'm no longer using credit cards, but am unsure what to do with the accounts they are connected to. Do I go ahead and cancel those accounts, or just leave them dormant? Just wondering if doing one or the other will benefit my credit score when I go to apply for a mortgage. Thanks!"

Yea! Ramsey is very excited for this guy -- he's seen the light and has decided to do away with his cards altogether. As soon as possible, shut your cards down completely. Simply having credit cards doesn't help your FICO score; you have to actually be making payments. If you leave the card accounts open, you're an accident waiting to happen -- you might fall back on the cards yourself, or an identity thief may go to town on the dormant accounts.

Ramsey doesn't worship at the alter of FICO, and thinks we all worry too much about our scores. It's possible to obtain a mortgage and a good rate if you have a low or non-existent score; you simply need to find someone who does manual underwriting.

If you're ready to shut down your credit accounts, you need to call AND write a letter to your card company. Ask for written confirmation that they account has indeed closed.