Consumers have been able to successfully cut the amount of credit card debt they carried over the last year and a half, but recent months have been less steady in their declines. Nonetheless, balances fell once again in April, and rather significantly.
The amount of revolving credit carried by consumers in April fell 4.8 percent on a year-over-year basis, after spiking somewhat in the month of March, according to the latest statistics on consumer credit issued by the Federal Reserve Board. Revolving credit is typically considered to be any balance that can be added to or subtracted from between one month and another, and is most commonly associated with credit cards.
As of the end of April, consumers owed some $862.3 billion in revolving credit, down from the $865.7 billion observed in March, when this type of balance rose 5.1 percent on an annual basis, but still slightly higher than February's total of $862 billion, the report said. In recent months, card balances have been fluctuating somewhat, beginning with a spike in borrowing at the end of last year that most experts say was the result of consumers using these accounts to finance holiday gift shopping efforts.
Meanwhile, the latest data suggests that interest rates consumers paid on their credit cards largely held steady, the report said. The average rate on all accounts stood at 12.34 percent at the end of the first quarter, and APRs on accounts assessed interest were at an average of 13.04 percent. Both were the same as rates observed in February.
But despite the drop in borrowing on consumer credit cards, the total amount owed by Americans increased once again in April, rising a total of 3.1 percent to more than $2.55 trillion, and up from just over $2.54 trillion in March, the report said. This was because the amount borrowed in non-revolving credit - that is, installment loans that do not include mortgages - rose 7.1 percent in April to a total of nearly $1.69 trillion. Non-revolving credit stood at slightly less than $1.68 trillion in March.
However, it should be noted that the increase in total consumer credit seen between these two months of about $6.5 billion was the smallest seen in the last six months, the report said. Nonrevolving credit in particular has been surging, largely due to consumers relying more heavily on the federal government to finance their educations. Loans issued by the U.S. Department of Education through its various programs totaled an outstanding balance of $458.7 billion in April, up from $452.6 billion at the end of March, and just $347.5 billion at the end of the first quarter in 2011.
Consumers have been trying to get their outstanding balances across all account types under control for some time, and balances have tumbled considerably since the recession as a consequence of more conscientious account management.
