Credit Card Balances Take Significant Decline
The Federal Reserve Consumer Credit Report released today shows credit card borrowing in July took its first decline in three months.
Revolving credit, which is made up primarily of credit card debt, dropped $3.4 billion to $792.5 billion in July. This represents an annual decline of 5.2%. This follows increases in both May (4.6%) and June (3.9%).
Revolving debt decreased for 27 consecutive months between September 2008 and November 2010.
With the economy in the state of flux, consumers are being understandably conservative in using their credit cards. Even though the Federal Reserve is keeping interest rates low to encourage borrowing and spending, consumers and banks are both taking a cautious approach.
A few weeks ago, the quarterly Senior Loan Officers Survey reported that only a small percentage of banks have eased their lending standards on credit cards, and banks reported only a moderate increase in consumer demand for credit cards.
Link to the latest Federal Reserve Consumer Credit statistics: