According to Fair Isaac Corporation, the company that calculates credit scores in the U.S., the average consumer has nine credit cards. With that many cards, there's plenty of opportunity to end up paying too much in excessive interest costs and hidden fees.

But it doesn't have to be that way. As these comments from the Armchair Millionaire community attest, smart credit card use doesn't cost, it pays:

«My credit card gives cash back on gas and supermarket purchases, up to $300 per year. I don't even know about the fees, as I pay off the balance each month. I would not even consider a card that charges a yearly fee just to use it.» --Joan K.

«We love to travel and most of my family is 1000+ miles away, so the frequent flyer miles on our credit card have come in very handy. So for us, it's a great value.» --Elizabeth

«We pay off our credit cards in full every month so we don't pay any finance charges. In addition, we charge almost everything to the credit cards since we get 2 percent cash back.» --mdonalds

Of course, the most important thing you can do to lower your credit card costs is to pay off your balance each month, and thus avoid paying interest. However, there are other steps you can take to ensure that you keep more of your hard-earned dollars in your pocket--and out of the hands of the credit card companies. My guide will get you started.

The Armchair Millionaire's Guide for Avoiding Credit Card Rip-Offs

Pay on time, every time. Especially when you have a fistful of credit cards, it's very easy to overlook a payment. But not only will you pay a hefty fee (the average is $27.46, according to consumer advocacy group Consumer Action), you'll lower your credit score and may see your interest rate go up. The best way to ensure that you're never late? Set up automatic payments with your credit card companies so that your bills are paid via electronic transfers from your bank account.

Just say no to cash advances. They're convenient, but very, very expensive. Not only will you pay a 2 or 3 percent fee upfront, you'll pay a higher interest rate on your cash advances than purchases on your credit card. Nor will you enjoy a grace period, so you'll pay interest even if you pay your balance off at the end of the month. So instead of turning to your credit card when you need quick cash, pull out your debit card instead.

Know the triggers for rate hikes. Many credit card companies will substantially increase the interest rate you pay under specified circumstances. These triggers vary from one company to the next, so read your credit card agreement carefully to know when your rate might be hiked. These are the most common:

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You were late with a payment.

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You were late with a payment to another creditor.

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Your credit score drops.

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You go over your credit limit.

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Bouncing a payment check.

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Getting a new credit card.

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Inquiring about a car loan or mortgage.

Don't be blinded by rewards. Those frequent flyer miles and gift certificates are enticing, but carefully weigh whether they're really worth what you pay. A high annual fee (or high interest rate, if you don't pay off your balance each month), could easily cost more than the value of a card's rewards. If in doubt, go for a card with no annual fee that pays you a cash rebate.

THE BOTTOM LINE: Credit cards are the ultimate in convenience, but that convenience can carry a hefty price tag. By managing your credit cards wisely, you'll ensure that you pay no more than you absolutely must.

THE ARMCHAIR MILLIONAIRE WEEKLY SURVEY: Are you counting on your house to increase in value? Log on to www.armchairmillionaire.com and let us know.

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Lewis Schiff founded the Armchair Millionaire Web site in 1997. His first book, The Armchair Millionaire, was published in 2001. Schiff's newest report, "How to Know When You Are Rich," is now available at www.armchairmillionaire.com.

CONTACT INFORMATION:

Lewis Schiff

Armchair Millionaire

877-833-2823

http://www.armchairmillionaire.com