Consumer Credit Slides in July on Big Dip in Credit Cards

Credit card debt outstanding fell for the second straight month in July, according to data released late Monday by the Federal Reserve. The drop was big enough to send total consumer down for the first month in nearly a year.

The Fed said in its monthly Consumer Credit (G.19) data release that revolving debt outstanding, mostly comprised of credit card accounts, fell by $4.8 billion – or at a 6.8 percent annualized rate – in July. It was the largest monthly drop since April 2011. Total credit card debt outstanding was $850.7 billion at the end of July.

The weakness in credit cards was enough to pull down total consumer credit, as non-revolving debt grew at an annualized 1 percent rate in July. Non-revolving debt – principally auto, personal, and student loans – is the larger of the two, but the small increase could not overcome the sharp decline in revolving debt. It’s the first month since August 2011 that saw an overall decline in consumer credit outstanding.

Credit card debt had been vacillating over the first half of 2012, but with July’s drop, there has been a decrease in total credit card debt outstanding in five of the last eight months. July also marked the second-straight month of declines after a large spike in May.