This month continues with the topic of credit cards. We've seen that credit cards can be tricky, but they can also help to simplify your spending. Credit Card Product Manager Courtney Hirayasu from Bank of Hawaii is here again to help answer some of our viewers' questions and offer tips on how to use a credit card.
Andrew asks, "Do credit cards having a spending limit?"
Credit cards have what is called a credit line, which is a revolving line of credit. So, say that you are approved for a credit line of $10,000. If you spend $2,000 on your card, you will still have $8,000 of your line left that you can use. However, if you make a full payment of $2,000, you will again have your full credit line of $10,000 available to you.
Mandee asks, "What happens if you lower the credit limit on your credit cards, does it negatively impact your credit score?"
Lowering your credit line could impact your credit score, because when you do that, your total credit availability will be reduced. Therefore, it could look like you are utilizing more of your credit, even though the actual balances on your credit cards remain the same.
Leticia asks, "Since the holidays are coming up, would it be better to use credit cards then cash? However, since it IS the holiday season, hackers might try to hack into a store's credit card system. The only reason I would use a credit card is to get my miles."
There are benefits of using a credit card for your holiday shopping, such as convenience and getting rewards for all of your purchases, depending on what types of rewards your credit card offers. With that being said, it's best to keep your credit card safe and monitor your statements. The great thing about credit cards is that credit card companies offer fraud protection so that you are not responsible for fraudulent charges. Whereas, if you were to lose your cash, chances of recovering that cash are slim to none.
If you have a SmartMoney question you'd like answered, go to our website to post your credit card questions.
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