Credit Card Debt Falls for 21st Month in June, Fed Reports

Credit cardsOverall consumer credit – credit card balances and other loans not tied to real estate – continued slipping in June – as Americas persist in reducing their debt in the midst of a weak labor market and sluggish economic recovery.
Credit card balances declined for a 21st month – to their lowest level since late 2005, according to the Federal Reserve’s update for June 2010.
Revolving credit dropped another 6.5 percent in June to $826.5 billion, compared to the previous month.
Both revolving and non-revolving credit – mostly auto and personal loans – fell $1.3 billion to $2.418 trillion, the Fed reported.
However, the consumer credit total for May was revised sharply higher to a decline of $5.28 billion, compared with the original estimate of a drop of $9.15 billion.
The decline for June was less than economists forecast, but the persistent slide in consumer credit – even just a 1 percent slip as in June compared to the previous month – added to other recent sobering government reports.
On Tuesday, U.S. Commerce reported that the personal savings rate – the amount Americans don’t spend from their income – increased to 6.4 percent in June, the highest level since June 2009.
Overall, consumers are borrowing less, paying down existing debt or saving more – all factors contributing to a slowdown in the recovery from a severe recession and financial system crisis that erupted in the fall of 2008.
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