Fed report shows sharp decrease in credit card use
See updated story: Fed report shows larger than expected drop in credit card use
Credit card balances shrank in November, as concern over banks' strict lending standards caused consumers to rein in their spending.
According to the Federal Reserve's monthly G.19 report on consumer credit, the revolving credit category -- made up almost exclusively of credit card debt -- saw a 3.4 percent decline in November. That's the largest single-month decrease since April 2004. Previously, the Fed had reported that revolving credit declined in October at an annualized rate of 0.2 percent. However, that number was revised in the current report to be a flat 0 percent. Overall, revolving debt fell to $973.5 billion. It had been $976.3 billion in October's report on consumer credit.
Meanwhile, nonrevolving credit fell 3.9 percent in November. The nonrevolving debt segment of the report includes a variety of types of lending, primarily auto loans, student loans and loans for mobile homes, boats and trailers.
Taken as a whole, consumer credit (revolving and nonrevolving) fell 3.7 percent to $2.571 trillion, a decrease from $2.579 trillion in the prior reading. It's the largest percentage drop since 1998, and in dollar terms, the $8 billion decrease is the largest ever recorded.
Published: January 8, 2009
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