Fred Clark explains the FICO scam for us:

Here’s how the scam works. You’ve got a $10,000 limit on a credit card and you’re carrying $2,500 due to a recent dental procedure. The lender, in the name of reducing risk, abruptly reduces the limit on your card to $4,000, announcing this change on page seven of the nano-type in a booklet mailed with your next monthly bill. Now instead of a 25-percent utilization rate, you’ve got a 63-percent utilization rate (they round up, when convenient), lowering your credit score.

That lower credit score means you no longer “qualify” for your previous rate of 9.9 percent and will now be paying 19.1 percent. Oh, and there’s a one-time fee of $35 dollars, conveniently added to your existing balance, for exceeding 50 percent of your available limit.

Unfortunately for you, these changes in your balance and rate became effective at 9 a.m. on the 15th of the month. Your electronic payment, dutifully set for the previous minimum payment, is credited to your account at 1 p.m. on the 15th. That minimum payment was based on the earlier interest rate, so it’s no longer adequate to cover your newer, higher minimum payment. A $35 late fee is therefore added to your balance and this delinquency is reported to the triumvirate, contributing to the further reduction of your credit scores. Second verse, same as the first.

The entire affair is designed to perpetuate both “bad” credit and high debt. Banks are not your friends. Frankly, no corporation is your friend. Behave accordingly.