Credit Card Debt Falls Again as Total Consumer Credit Expands on Student Loans

Total consumer credit card debt outstanding decreased in September for the 25th straight month. Consumer credit card debt levels now are at the same level as in mid-2005 after peaking in mid-2008.

The Federal Reserve said late Friday in its monthly Consumer Credit statistical release – also called the G.19 report – that revolving debt, mostly comprised of credit card debt, fell an annualized 12.1 percent in September, or by $8.3 billion, to $813.9 billion. It marked an acceleration in the rate of decline as revolving debt had fallen by 7.3 percent in August.

The Fed said that total credit card debt outstanding fell at an 8.8 percent annualized rate in the third quarter of 2010 in its first estimate of the quarterly reading. Credit card debt outstanding fell by 7.2 percent in the second quarter and 8.5 percent in the first quarter of the year.

But overall, consumer credit outstanding expanded in September, a surprise to most economists. Non-revolving debt – like that found in student, auto and personal loans – increased 7.9 percent in August after expanding at just a 0.1 percent annual rate in August. Total non-revolving debt now stands at $1.598 trillion.

The expansion in non-revolving debt in September was most likely due to student loan issuance at the beginning of the school and other loans related to education.

The Fed’s G.19 report does not track debt backed by real estate.

Total consumer credit outstanding in the U.S. was $2.412 trillion at the end of September after peaking at $2.582 trillion in July 2008.