Credit Card Debt Still Falling at a Steady Rate

Total consumer credit card debt outstanding decreased in August for the 24th straight month. Consumer credit card debt levels now are at the same level as in late 2005 after peaking in mid-2008.

The Federal Reserve said late Thursday 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 7.2 percent in August, or by $5 billion, to $822.2 billion. Revolving debt also fell by 7.2 percent in July.

In the first quarter of 2010, revolving debt slid at an 8.5 percent annualized rate while the same measure dropped 7.2 percent in the second quarter.

Non-revolving debt – like that found in student, auto and personal loans – increased 1.2 percent in August after expanding at a 0.7 percent in July. Total non-revolving debt now stands at $1.592 trillion.

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

Charge-offs continue to be a main driver in the rapid fall of credit card debt. Moody’s recently reported that card charge-offs at major issuers climbed back over the 10 percent mark in August after improving slightly over the early summer. Delinquencies, however, continue to improve, with August’s average reading falling below 5 percent. The improvement in delinquencies could signal that charge-offs will decrease in coming months as banks have already worked through a backlog of old bad debt.

Total consumer credit outstanding in the U.S. was $2.414 trillion at the end of August after peaking at $2.582 trillion in July 2008.