Credit cards; the little bit of plastic that goes a long way...and then gradually takes over your life if you're not extra careful!

A study by those wonderful money boffins over at Fool.co.uk reveals that 296 out of 300 credit cards use "negative payment hierarchy".

This means that if you regularly carry a balance on your credit card, and the outstanding amount comprises debts that attract different interest rates, then you have a 99% chance of being with the wrong credit-card provider.

Those of us who need to be most aware of negative payment hierarchy are those who use 0% credit cards for balance transfers, and subsequently use their card for making purchases or cash withdrawals.

With negative payment hierarchy, any payments you make goes towards paying off the debt with the lowest interest rate first.

Consequently, any purchases and cash withdrawals remain on your credit-card bill racking up extra interest; ouch!

Nationwide has estimated that those of us with these credit cards could unwittingly pay another £500 million in interest payments before providers have to highlight the order that payments are made next year.

So what does the negative hierarchy look like?

Lets say that you transfer a £2,000 balance to a new credit card with 0% interest for 15 months, but it charges you 16.9% APR for purchases.

If you then make a £500 purchase, interest will accrue on that transaction until after the £2,000 balance is cleared in full. Over the 15-month deal, the £500 debt will compound at 1.3% a month to £607.

Some of the most dangerous cards are those that have high interest rates and long balance transfer periods. So, if you inadvertently use your card to make a purchase as well as for balance transfers, interest will compound on your purchase until your balance-transfer debt is cleared!

Below are some of the most dangerous cards that you should probably avoid:

Card APR Balance Transfer period

Egg 16.90% Until 1/10/2008

AOL Rewards 16.90% 12 months

Tesco Clubcard 16.90% 12 months

Citi Platinum 16.90% 12 months

Bank of Ireland 16.90% 9 months

Shell MasterCard 16.90% 9 months

Co-operative Bank Travel 16.90% 6 months

John Lewis-Waitrose 16.90% 6 months

Bank of Ireland 16.90% 6 months

MBNA Travel American Express 31.50% 6 months

David Kuo, Head of Personal Finance at Fool.co.uk, says:

"It is not illegal to fiddle with the order in which payments are allocated on credit cards. But negative payment hierarchy is a devious way to exploit customers' inexperience.

"Negative payment hierarchy is especially nasty when tucked behind generous 0% balance-transfer deals. These 0% cards can be a useful vehicle for people who need some breathing space to get their finances in order.

"Our study shows that whilst the vast majority of card providers employ this sly practice, Nationwide and Saga should be applauded for their use of 'positive' payment hierarchy.

"But the use of negative payment hierarchy by the rest is tantamount to making customers run backwards to catch a bus. It's an almost impossible task to accomplish especially if the bus is pulling away at speed."

So, if you must have one, here are Fool.co.uk's top tips for using 0% credit cards:

• Use a 0% balance-transfer card for balance transfers only

• Destroy the card after you have transferred your balance, so you don't use it

• Pay your bill on time, every time

• Make a note of when your 0% deal expires

• Stick with cards whose 0% deals on balance transfers and purchases occur over the same period

• When switching deals, allow plenty of time to get a new 0% card - it can take a month to complete all the paperwork

Banks are keeping defrauded customers in the red