Consumer credit card balances fall 7 percent, marking 2 full years of decline

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Consumer credit card debt has now fallen for two full years, according to the Federal Reserve’s latest G.19 consumer credit report, as continuing economic troubles have made banks and borrowers unwilling to carry too much debt.

AFTER STEEP CLIMB,
CREDIT CARD DEBT FALLS

Americans’ credit card debt has fallen for a record 24 straight months. During that time, consumers have shed more than $150 billion in credit card debt. That sounds huge, but it isn’t when compared to the nation’s total credit card debt. The graph above shows the dramatic rise of credit card debt between 1970 and 2008 and then the sharp drop since 2008.

With today’s consumer credit release[3], there isn’t much reason to believe that things will change anytime soon: Fed data shows card balances fell 7.2 percent in August, continuing the drop that began in September 2008 and marking 24 consecutive months of decline. The last time credit card balances rose, George W. Bush was president, few non-Alaskans had heard of Sarah Palin, Michael Jackson was still alive and the iPad was just a glimmer in Steve Jobs’ eye.

Economic pressures on lenders and cardholders alike have taken a serious bite out of credit card balances. Revolving debt levels dropped to $822.2 billion from $827.2 billion in July, marking a plunge of $151.4 billion from their August 2008 peak of $973.6 billion. For the typical credit cardholder, the result is substantially lower balances. The average U.S. household with credit card debt — of which there are roughly 54 million, according to government data — has eliminated roughly $2,804 in credit card debt as consumers increased their repayments or had the debt charged off as uncollectable.It wasn’t just card balances that fell in August. Overall consumer debt fell by 1.7 percent to $2.41 trillion. That number includes both revolving credit[4] — almost entirely made up of credit card debt — and nonrevolving debt — which includes auto loans, student loans and loans for mobile homes, boats and trailers.

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