Dalton Smith, treasurer and vice president at Generations Bank in Rogers answers some uncommon questions from Liz, an Arkansas student.
Why did my credit score go down when I overpaid my credit card?
Dalton: "When you overpay on your credit card, you are basically prepaying for future purchases. One of the ways a credit bureau decides your credit score is account utilization and when you are using your own money instead of the credit card company’s money the credit utilization will be very low to zero, which could lower the score."
How many credit cards should I have?
Dalton: “You definitely want to have one credit card to help you build your credit history so you can have a great credit score. A credit card can also help you in times of emergencies. Credit cards can be very dangerous because of the credit limits, so you have to be extremely careful when using them.”
How much credit is usually approved for first-time credit users? How do I grow my credit?
Dalton: “When you first apply for a credit card, they will start you off with a lower limit amount. Once you start using the credit card and paying it on the date it is due, the credit card companies will increase your limit. Credit card companies also like to look at how much you make a year, so that plays a role in the calculation too.”
How much should I have in my savings at all times for emergencies?
Gus: "This question really has more than one answer so it depends on who you ask, but most financial advisers recommend keeping three to six months worth of expenses in your savings for emergencies. Now, if you have debt to pay, keep a smaller emergency fund while paying more toward your debt."
How should I bank if I move around a lot?
Gus: Before you move, you should have a conversation with your current bank to let them know your situation, because they may have tools and capabilities that will allow you to continue banking there even when you do move. By having answers to the questions asked, such as closest location, fee free ATMs and being able to deposit checks without visiting the branch, you can determine if you need to make a switch.
What do I do if my checking account is defrauded?
Gus: Alert your bank immediately! Depending on what compromised your account, the bank will simply cancel your compromised debit card and issue you a new one with a new debit card number, or they will close your account and open a new checking account with a new account number. New checks and debit cards will need to be issued, as well, that will be tied to the new account. They will most likely file disputes on the unauthorized charges to get your money back. The bank will more than likely put an alert on your profile as a precaution.