A Suze Orman exclusive

Here are twelve traps that many credit card holders fall into.

1. Paying late. Your timeliness is the single biggest factor in determining your FICO score, so always pay your bill on time, even if it is just the minimum balance due. Besides, if you are late on a low-rate card, that gives the card company the right to ratchet up your rate. You could see a zero percent card jump to 15 percent or 20 percent, just because you didn't get the check to them on time. Send it by Fed Ex if you have to!
   
   
2. Going over your credit limit. Not only is there a fee of $35 or so, but it also gives the card company the right to change your interest rate. You can say sayonara to any low rate you may have had.
   
   
3. Paying a high interest rate. There is no reason to pay the 15 percent to 18 percent interest rate charged on many cards. If your FICO score is at least 700 you should negotiate for a better rate, or transfer your balance to a low-rate deal.
   
   
4. Canceling a credit card account. Your "history" in making payments on your card is a factor in determining your FICO score. Cancel the card and you have wiped out important history; that can send your FICO score lower.
   
   
5. Charging up a new balance on a card you used for a balance transfer. The great no or low interest balance transfer offers are just for the amount you transfer. All new purchases are going to be charged a different rate that can be above 10 percent. Find out that rate before piling on new charges.
   
   
6. Using a card where the billing method is the two-cycle average balance. If you tend to carry a balance, you are far better off with a card that uses the Average Daily Balance method; it will reduce your interest costs.
   
   
7. Using your card like an ATM. Cash advances are a horrible deal, carrying interest rates that are often above 20 percent. And the card company will make you pay off your regular balance first, before allowing you to tackle the advance balance. They love making you pay the higher interest for as long as they can.
   
   
8. Co-signing for a friend's credit card. That'll make you financially responsible for their charges, and their credit card behavior shows up on your credit report!
   
   
9. Paying off credit card debt with a home equity line of credit (HELOC). Card debt is "unsecured"; housing debt is "secured," which means you can lose the house if you can't make the HELOC payments. Obviously, it makes no sense to put your house at risk to get rid of an unsecured debt.
   
   
10. Not paying off the card with the highest balance first. When you have multiple cards with balances, always pay off the card with the highest interest rate first.
    
    
11. Not having a credit card. Without a card, you won't have a credit history, and it's that history which lenders use to decide if they want to give you a loan. So if you ever plan on buying a home, a car, or applying for a business or personal loan, you need the payment history that comes with owning (and using) a credit card.
    
    
12. Screwing up paying on any cards. Don't think that one card cannot affect the others, because it can. The credit card companies usually keep a close eye on your FICO score. If you miss payments on one of your cards and thereby reduce your FICO score, your other card companies may use this FICO decline to justify raising your rate on the card you have with them, even if you have never been late.