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Michael D. Hart, P.C.
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Tips for using a credit card responsibly

According to research by the credit reporting agency Experian, residents of Virginia had the third-highest credit card balance in the country in 2017 with an average of $7,161. The state with the least credit card debt was Iowa, averaging $5,155 while the highest was Alaska at $8,515.

The report also found that 43 percent of people did not pay off their balances in full each month. This is known as revolving debt, and it has exceeded $1 trillion in the United States. Interest as a result of revolving debt cost households an average of $1,000 each month. However, running up a high balance each month can hurt a person's credit even if that balance is always paid off. The debt in proportion to the limit for the credit card is referred to as the utilization rate, and it is best to keep this under 30 percent.

The number of credit cards a person has may also be an issue. People in Mississippi had the fewest with 2.57 cards while people in New Jersey had the most with 3.49 cards. According to Experian, acquiring and using a new card should be done strategically. While getting the card can cause a temporary drop in credit, keeping the utilization rate low and paying it off monthly may ultimately raise a person's credit score.

Unfortunately, for some people, credit cards may seem useful in the short run but cause serious problems for people in the long run. Some people may find themselves struggling with credit card debt and unable to keep up with payments. Bankruptcy may be an option. With a Chapter 13 bankruptcy, a person may work out a payment plan and keep some assets, such as a home. However, certain debts cannot be discharged in a bankruptcy including most student loan and tax debts.

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Michael D. Hart, P.C.
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Roanoke, VA 24011

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