Consumers may have increased their credit card spending in December to buy holiday gifts, but the latest numbers from the Federal Reserve indicate that the great American debt pay-down continues. Revolving credit, which mostly consists of consumers’ credit card balances, dropped to $795.5 billion in January, according to a report by the Federal Reserve.
That represented a 6.5% decrease from the previous month. Except for the 3% increase in December, the drop in January continues a trend in which consumers reduced credit card debts for 27 months in a row.
“I think overall, consumers are hunkering down and getting serious about trying to cut down on their debt,” says Gerri Detweiler, Credit.com’s personal finance expert.
Nevertheless, the decline in balances doesn’t amount to good news for everyone.
“Some of that is because there are still a lot of charge-offs and bankruptcies working their way through the system,” Detweiler says. “So some of these people couldn’t get new credit even if they wanted to.”
[Resource: Tips for Paying Off Credit Card Debt]
Image: David Goehring