For Arkansas families depending on credit cards to carry them through the month’s spending, it is important to know that experts believe that a large amount of credit card debt can hurt overall credit ratings. The Federal Reserve Bank of New York released figures that show that credit card debt nationwide is now at $700 billion while revolving credit in general tops $887.9 billion. Experts fear that some debtors may be under the mistaken impression that a large credit card balance builds a favorable credit rating.

The truth is that a high balance hurts a credit rating rather than improving it. Paying off balances on time and in full each and every month is the key to building a strong credit score. However, the average credit card balance is now at $5,234 per person, indicating that most people do not pay off their credit cards in a timely manner.

Many young borrowers mistakenly believe that carrying a balance will help them “build credit.” Even if they never miss a payment, however, carrying a balance that is very high in proportion to their credit limits can have a negative effect on their overall credit rating.

Ultimately, carrying high credit card balances can also result in disaster if the cardholder suffers a financial setback such as a medical emergency or a job loss. A credit card lawsuit may result in a judgment against the debtor that can cost thousands of dollars in fees and accrued interest. An attorney who works with credit card debtors may be able to help the card holder find ways to manage excessive credit card debt through bankruptcy and other methods.