First, let me state I am speaking from experience. I bought
into the myth (a polite word for a LIE) that you need to have
credit cards to function in modern American society, and that
credit is a tool by which you can leverage other people's money
to build wealth. The reality is that you are the one that gets
leveraged into a negative net worth. Always remember that
"creditor" rhymes with "predator."

That is what these companies are, predators. A useful analogy
is fishing, where the credit card company is the fisherman and
you are the fish. The fisherman puts a tempting morsel on a
hook and casts it into the water. You, the fish, see it, are
tempted, and decide to bite. Then you are hooked. At first the
fisherman lets you run with the line (i.e., keeps raising your
credit limit as long as you make payments). But eventually the
fisherman will reel you in (cut your credit limit) for the kill
so he can devour you.

That is happening a lot right now. Credit companies are cutting
credit limits due to the credit crisis and floundering economy.
They can cut you off even if you make all your payments on time
on all of your cards. Then that starts the domino effect.
Suppose you have a card with a $10K credit limit and a $5K balance,
and the credit card company decides to cut your credit limit to
$5K. So it looks like you maxed out the card, even though you
didn't do it, the company did it. And when your other credit
card companies look at your credit report, which they do periodically,
they think you maxed out a card. So they in turn also cut your
credit limit to about what you already have on the card. Then
still more companies follow suit.

I had one card that promised me a 8.9% interest rate as long as I made the
required payments. Then one month they said I could skip that
month's payment. Being short on cash, I did, which was a big mistake.
In the next month's statement they had jacked up the interest rate
to 19.9%. I probably should have complained about it, but I didn't.
I just transfered the balance out of there at the first opportunity.
So beware of an offer to skip a month's payment, especially if you
have a low rate on a card. It could be a trap.

Also be careful if you get a good offer on a balance transfer or
otherwise are offered a good rate. I have found that I sometimes
did not get the statement in the mail the month after I took advantage
of the offer. I suspect this may have been a deliberate dirty trick.
Were they hoping you would not pay if you did not receive the statement?
Of course, if you don't pay, the good rate is gone, because the offer
is conditioned on your making all the required payments. I know
things can get lost in the mail, but for this to happen twice, with
two different cards, right after taking a good offer, seems too much
of a coincidence. If you don't get the bill, you should make the
payment anyway. Each card has a toll free number you can call to
find out the minimum payment due, the due date, and the payment
address.

You should use money orders when paying credit cards, even if it is
less convenient than using checks. When you pay by check,
they have the routing numbers for your account. And if for some
reason you can't make payments, they can use these numbers to
take money out of your checking account without your permission.
They can clean you out, and yes, they can do this without suing you
and getting a judgment. I've heard it's illegal for them to do
this without a judgment, but I've also heard they have done it anyway.
I've seen cases reported on the Internet where a creditor has faked a pay
by phone check to take money out of a checking account. If that
happens, your only recourse is to close the checking account.

Yes, credit cards can be convenient, but you should only use them if
you can guarantee that nothing will ever go wrong in your life, that
you will always have a steady income, and that you will never suffer
an illness or injury. Because just at the time you need mercy they
will have none. Remember, "creditor" rhymes with "predator."