Forget Your Credit Card

I have always advocated doing everything possible to pay off credit card balances; it’s good financial management and the ticket to a strong FICO credit score. But the ridiculous recent behavior of the credit card industry makes it hard for consumers to protect their FICO scores. Credit card companies are jacking up interest rates, lowering credit limits, and closing accounts—and people who have made timely payments are not exempt. So even if you pay off your balance—and that’s tough when interest rates are insanely high—there’s a good chance your credit limit will be slashed, and that will hurt your FICO score. Meanwhile, the recession is making it more important than ever to have a large emergency savings fund. Unemployment is closing in on 9 percent and will no doubt rise further. Even if you have a job, you could face reduced hours or the benefits.