Consumers Reduce Credit Card Use for 2nd Month, Driving Down Other Debt

U.S. consumers cut back on borrowing from credit cards for a second straight month in July, recording the first overall drop in both revolving debt and installment loans since August of last year, according to Federal Reserve data released today. If you are unsure what installment loans are, check out installment loans over others by disease called debt as it’s a good article explaining it.

The numbers point to a more prudent consumer concerned about household debt in the face of a weak jobs market and a still uncertain housing recovery.
Total consumer borrowing slipped $3.3 billion in July from June to a seasonally adjusted $2.705 trillion, the Fed said.

However, June’s figure was increased to $2.708 trillion, or $130 billion higher than first thought.

June had marked the ninth consecutive monthly increase for overall U.S. consumer credit.

American credit card usage had paked at $1.03 trillion before the peak of the financial crisis in late 2008. In July, revolving debt from plastic was at $850.7 billion, a decrease of 17 percent over the four-year span.

But the reverse has occurred with consumer installment loans, primarily taken out for buying autos and paying for higher education.

In the same four years since the crisis peak, auto and student loan debt has surged to $1.85 trillion in July 2012 from $1.56 trillion in July 2008.

The Fed’s figures do not include loans tied to real estate.
However, Americans have been also reducing their mortgage debt. U.S. Household debt, including mortgages and home equity lines of credit, has fallen for 16 consecutive quarters to $12.9 trillion in March, according to a separate Fed survey.

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