So have I. When I was much younger our family sweated at jobs we hated just to keep up with all the payments. And it’s not like we were living the high life off the debt, either. Most of it was spent on basic necessities and the occasional simple pleasure.

If you’re clever, credit cards are a great way to “float” the payment of anything you buy for as much as 25 to 30 days after purchase – taking advantage of the grace period without racking up interest. That’s how I make use of them today, and I think the only sensible way to deal with personal credit (business credit is another thing entirely.)

But beneath the obvious veneer lurks a more sinister legal truth – one that can trash your credit rating and leave you drowning in fees.

At first these lies sound sensible, even smart. However, their bite is often worse than you could imagine.

Lie #1. Scribbling “Check ID” in the signature area to ward off identity theft

Some well-intentioned cops even recommend this. The idea is to deter would-be identity thieves by prompting the cashier to double-check to ensure the “carpet matches the drapes” so to speak. After all, if the con artist can’t produce valid ID, he can’t make off with the loot, right? And besides, why spread around copies of your signature to anyone who peeks inside your purse?

Well, even though an unsigned card is invalid under official credit card agreements (the ones nobody actually reads) most under-paid, over-worked retail employees will skip right over it, rendering your defense meaningless.

What they’re SUPPOSED to do is check your signature against a valid driver’s license or passport, but even if they follow protocol it’s easy for a trickster to swirl your signature on command… because the reality is the employee has better things to do than hold up a growing line of impatient customers over a slight difference in handwriting.

From a liability standpoint, you’re only technically responsible for the first $50 of stolen money… but any company worth their salt won’t even hold you to that – not if they value your business as a customer in good standing.

So what do you do? In my experience it doesn’t matter if you write “Check ID”, your name, or sign “Adolf Hitler” to the back of a credit or debit card… no one really enforces the legality and a “Check ID” designation isn’t going to change a thing if the card is ever actually stolen.

I say just leave the damn thing blank.

Lie #2. You need each one of the “Big Four” credit cards to survive in modern society

You’re trapped at the mercy of a hurricane-like storm down a forgotten road outside El Paso, Texas. You could escape certain doom if only the toothless old man at the beaten-down gas station would accept your Rewards-Plus card.

Rubbish. Even though American Express and Visa have fooled everyone about this in their ads for years, it doesn’t make it true.

For example, I shop a lot at Sam’s Club. They “only” take Discover and their own branded card. Costco “only” takes American Express. But you know what? I don’t use either of them at those places. I use my debit card, even though it’s technically a “Visa” and when I want to be private, I use cash.

Amazingly, we here in America sometimes forget about cash. Businesses still accept the stuff, you know.

With credit cards, you should really only have 1 or 2 at the most. Personally I carry a Business Visa and an American Express, in addition to my regular debit card. The American Express actually serves no real purpose other than making me feel “cool” with the prestigious rare card they issue.

Speaking of that…

Lie #3. American Express cards give you unlimited purchasing power

If you look closely, their famous “no preset spending limit” has a little disclaimer star beside it.

Even if you’re one of the few thousand in the world with a Centurion Card (otherwise known as the American Express “Black” card – the same one James Bond carries) you STILL have a limit, albeit a very high one.

What American Express does is calculate your limit dynamically. It’s in constant flux based on your finances and past history with the card.

When a big purchase comes through, American Express might say “Ok, let’s see how you handle this one.” If you pay it off by the due date without a fuss, they say to themselves “Ok… this guy’s a spender. Next time we’ll let it slide.” And so on, and so on. If you structure it right, you can flex the boundaries of your limit well beyond that of mortal man.

And that’s how the lie spreads. But for most people, AmEx is gonna eye you very suspiciously when that $12,000 cruise comes through after you claimed to only make $30k a year. They’ll probably swat it down like a fly unless you call their office beforehand to assure them it’s on the up-and-up.

Lie #4. All cards with Visa or Mastercard logos will affect your credit

We’re surrounded with charge cards, credit cards, debit cards, ATM cards and God-knows-what else. Most people just assume that if it has the Visa or Mastercard logo, it works “kindof like a credit card” and will therefore affect your credit either positively or negatively.

That’s not true.

Charge cards you pay a fee for and let you put whatever you want on them as long as you’re responsible enough to pay it off every month. Debit cards instantly take the money out of whatever cash account they’re linked to. ATM cards ONLY work at ATM’s and are worthless without a PIN (much like debit cards, except they won’t let you purchase anything directly.) And of course credit cards loan you small bits of money for whatever you purchase and charge interest if not paid within the grace period.

Debit cards and ATM cards are not taken into account when calculating credit scores. They are considered cash in that respect.

Lie #5. They’ll think more highly of you if you pay more than you owe

Actually the opposite is true.

Credit card companies love good customers, but a “good customer” is not someone who pays off their bill all the time and certainly not someone who pays more than they owe.

Remember, this is a “credit” account, not a bank acocunt, and these guys are in the business of making money. They do that primarily by charging interest and fees and they hate straight-laced responsible citizens who always spend less than they make.

This isn’t something that will help your credit score either. It doesn’t matter if you pay off the balance or throw an extra grand on there to where they actually owe you money, it still gets reported as a “zero” balance to the credit agencies.

Lie #6. If you go over the limit, but pay it back in time, everything will be OK

No, everything will not be OK.

Back in the old days, credit card companies used to decline any charges that spilled over your limit. These days their accountants have discovered that’s bad business. They make far more dough when they let it slide, and quietly ding you with an overage fee.

So that’s why their computers watch your account with an eagle eye, eager to sock you with penalty fees and a jacked up interest rate, which will certainly come as a nasty surprise on your next statement.

And they won’t just do it one time, but each time you go over… even if it’s during the same billing cycle.

Lie #7. Sellers can set a minimum charge amount

There’s a great Chinese restaurant I used to frequent that kept a sign posted next to the cash register:

“Minimum credit card purchase: $10″

And guess what. Everyone obeyed it. You could see frustrated guests fumbling around in their pocket for change when they’d planned on charging dinner that evening.

Good for the restaurant, sure, but a violation of their merchant account agreement with the credit card companies. I knew this and called them on their bluff. The merchant company got wind of the news and threatened to pull their ability to take cards altogether. It wasn’t long before they took down “$10 minimum” sign.

Did I do this to be an asshole? No, I did it because it’s annoying, wrong, and as a merchant myself I know that people will buy more from you in the long run if you don’t set such short-sighted terms and conditions.

From a business point of view, I did them and all their customers a favor.

Credit cards make life easier, but they also open you up to harassment and invasion of privacy. To hide your money and keep your private life under control, check out Joe Decameron’s “Perfect Privacy Solution” available here at The Legal Secrets Report.

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