August 09, 2010
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News: Overall Reduction Of CC Debt Falls Short
Americans have become very conscious of how they are spending their money these days and more aware of their credit card spending. The nation's overall debt which includes credit card debt has been on a continuous decline over the past year and everything points to it continuing to decline. A recent report by the Federal Reserve indicates that for the 19th month over the past 21 months, Americans have reduced debt once again. Although Americans did another good job over the past month, the number failed to lower to expectations. Of course retailers were pleased that analysts were not on their game as sales were slightly above projections and consumers loosened up a little on credit card spending.
The Fed report indicated that overall U.S. credit card debt decreased in June by $1.3 billion from the month of May to a total overall debt of $2.42 trillion. Analysts had predicted an estimated decrease of $5.3-billion. The total debt reported in this number does not include real estate loans and mortgages. The U.S. overall credit card debt fell $4.5 billion to a seasonally adjusted $826.5 billion in June; a 6.5 percent decrease. Over the past 21 months, it has fallen by 13.3 percent from $958.1 billion at the end of 2008. Although many Americans have been working at tightening the belt and cutting spending, much of the reduction in card debt can be attributed to the massive amounts of card write-offs and from banks cutting off credit.
While credit card debt continued to decline, other categories reported an increased by $3.2 billion to $1.592 trillion; a 2.4 percent increase. This category includes auto loans, student loans, and other consumer loans. Despite the increase, this category remains below the total at the end of 2008. As consumers continue to reduce card spending, the national saving rate increased to 6.4 percent, up from 6.3 percent in May and 6.0 percent in April.