Big Decline in Credit Card Debt
New government reports give a glimpse into how consumers are handling their credit cards during these tough economic times.
The latest monthly Consumer Credit Report from the Federal Reserve shows revolving credit, the majority of which is credit card spending, decreased $4.82 billion in July, the biggest decline since April 2011. Revolving credit fell to $850.7 billion, which represented an annualized decline of 6.8 percent. Since finances remain tight for many households, Americans are still cautious with credit cards and seem to be cutting back on purchases made with plastic to avoid new debt.
Two weeks ago, the new Quarterly Report on Household Debt and Credit, published by Federal Reserve’s Bank of New York, showed that credit card balances, delinquencies and number of accounts declined in the second quarter from the previous quarter.
Credit card balances dropped to $672 billion, the lowest level since 2002. This represents a decrease of 22.4 percent from their peak of $866 billion which took place in the fourth quarter of 2008. Credit card delinquencies of 10.9 percent are at their lowest level since 2008. The number of open credit card accounts was 383 million, down 23 percent from the 2008 peak of 496 million accounts.