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Samuel Freshman and Heidi Clingen: FICO scores and credit card rates


Posted: September 23, 2010 10:25 p.m.
Updated: September 24, 2010 4:55 a.m.

DEAR SMARTIES: I feel very sorry for all people who were caught in Bernard Madoff’s scheme. Obviously, some very smart people were completely fooled by him, such as advisors to Steven Spielberg and Jeffrey Katzenberg.
I like what Kevin Bacon said, “There are a lot of things I’m grateful for: my health, my family, my career, my family’s health. We’ll march on. We have to. There’s nothing you can do about it.” —Sympathetic in Sherman Oaks

HEIDI: Kevin is brave and he is right. Other things in life matter more than money.

Nevertheless, the victims of financial terrorist Madoff offer a warning to us all: Anyone, and I mean anyone, can be a victim.

When you have a hunch, investigate it. When you have a question, get the answer.

Also, as a woman, I can say to other women sincerely, don’t let men “pat you on the head” and tell you not to worry about your finances. Follow your hunches. When something sounds too good to be true, sadly, it probably is.

SAM: Bernard Madoff created a financial holocaust. Nevertheless, the fraud signs were there for those who looked. For every person who invested, there was another person who turned him down. If a proposal looks too good to be true, it is. Don’t invest in things you don’t understand.

DEAR SMARTIES: I thought that my credit card interest rates were supposed to last for the life of the card. My FICO score is excellent, so I wasn’t worried. But suddenly, I get a notice that my rates are being raised to prime plus, which is almost 20 percent! That means thousands of dollars in interest per year. How can this be? — Stunned in El Segundo

SAM: John Adams, one of our Founding Fathers, once wrote, “All of the perplexities, confusion, and distress in America arise, not from the defects of the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation.”

Few people predicted these tough times we’re in, so you’re not alone. Nevertheless, people must understand the nature of credit and how easily it can hijack their finances. Credit agreements often allow the lender to change terms. You must read the fine print.

HEIDI: Currently, these kinds of interest rate adjustments are legal. Don’t ask me why. It’s happening across the board, so everyone, be forewarned.

DEAR SMARTIES: We’ve funded our IRAS and 401(k) s and want to know what we should do next. —Prepared in Palos Verdes

SAM: Look at what your future needs are going to be. Don’t assume that (1) you will always have the same earning power, (2) your retirement accounts will grow at a healthy rate, (3) you will have that job until retirement (4) your health and marital status will remain the same

HEIDI: Build an emergency fund that gives you real confidence. You just never know when you might need it.

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of “The Smartest Way to Save, Why You Can’t Hang on to Money and What to Do About It.” They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email


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