7 worst credit card habits

Likely you've done it -- lost your credit card bill under a pile of papers and by the time the bill surfaces, it's past due. Guess what: You've just committed one of the seven deadly sins of credit card use - and the costs will add up.

Yes, the best credit cards are a convenient way to pay. Compare the time and hassle saved swiping your gas credit card at the pump to going inside a cramped, noisy convenience store to hand over cash. You can rack up credit card rewards too. But committing any of these credit card no-nos can ding your credit score, cost you money and even eat up some of that time you thought you'd saved.

Paying late

"The no. 1 deadly mistake is paying your bill late," says Manisha Thakor, author of Get Financially Naked. "People say, 'It's just a day late -- it's not a big deal.' But a lot of people don't realize that being an hour or a day late is as bad as being five days late."

The consequences are short-term and long-term. Short-term, a late credit card payment can cost you up to $25 in late fees, plus interest.

Long-term, your low-interest card could quickly become a high-interest-rate card, says Jessica Cecere, regional president, CredAbility of South Florida, a nonprofit for credit counseling and education. "You can be late one time and you're done," she says. "You might have a 12-percent interest rate and it could go to 24 percent."

Long-term, your credit score also can be affected. "The timeliness of your credit card payment is 35 percent of your credit score," Thakor says. "One small thing -- being late -- mucks up a third of your credit score."

Paying only the minimum

"A lot of people are still paying off Christmas 2010," says credit counselor Patrick Owens, of ClearPoint Credit Solutions in Richmond, Va. Bad idea. You've probably noticed that your credit card bill now has (it's required) a box that says how much you'll pay if you pay only the minimum due. "You may be paying for 20 years on a couple thousand dollar balance," he says.

You could end up paying nearly double for that cute outfit or fancy restaurant meal, Thakor says. "A rough rule of thumb is, if you have an interest rate in the high teens or above and just make the minimum payment, you have essentially almost doubled the price," Thakor says. "So that $100 pair of jeans cost you nearly $200."

Co-signing for a credit card

Some parents co-sign for a young adult child's credit card with the good intentions of helping the child establish credit, Owens says.

"But it's a gamble for parents when you add children on," he continues. "Some kids have not used credit cards before and they run up a big balance. That causes problems for both the kids and the parents."

If you're co-signing for a child's credit card, first make sure they understand how credit cards work, Owens says. Also, consider a secured credit card or prepaid debit card set up with money to cover the balance. When that money's gone, the cardholder can't use the card anymore, he says.

It's not just middle-aged adults getting burned on co-signing for a young adult's credit card. Sometimes it's the other way around, Thakor says. "I've seen cases of kids helping adult parents," she says.

Co-signing for anyone can be a bad idea, Thakor says. "It's like unprotected sex once you co-sign," she says. "The other person's reputation is reflecting back on you. And if they don't pay, creditors are going to be coming to you next for that money."

Letting someone else use your credit card

Letting someone borrow your credit card can create hassles in addition to exposing you to financial risk. "One of my friends lent her credit card to an individual to use at a store," Owens says. "His name wasn't on the card. They asked for ID at the store and when the name didn't match, they confiscated the card and she had to go to the store to pick it up."

Robbing Peter to pay Paul

While a balance transfer to a low rate card can save you money on interest, if you're transferring the balance because you can't afford to pay it, that's a bad sign, Cecere says. "You're not actually getting yourself anywhere when you do that," she says. "You're robbing Peter to pay Paul. That's not only one of the seven deadly sins, but also a warning sign you're in financial trouble if you're using one card to pay another."

Too many credit cards

All those credit card rewards and store discounts can entice you to apply for, and end up with, too many credit cards, Cecere says. "If you apply for too many cards at once, your credit score will go down," she says.

Cancelling all credit cards

So perhaps you're reading this and you've decided to just get rid of all your credit cards -- the business credit card, the gas credit card, the rewards credit card -- all the plastic, gone. Then you can't possibly mess up your credit. Right?

Wrong. "You don't want to cancel all your credit cards at once," Cecere says. Then you have no available credit, she says, plus you're also affecting your credit history. Instead, go ahead and pay them all off but don't close them, she says.