For the month, preliminary numbers show revolving consumer credit decreased at an annual rate of 9.3 percent. Revised numbers for the third quarter show that revolving credit decreased at an annual rate of 7.25 percent. The majority of revolving credit centers around credit card debt, and a drop indicates more people may be trying to get out of debt.
Revolving credit has dropped in each of the quarters dating back to the fourth quarter of 2008. For October, revolving consumer credit dropped to $888.1 billion after being as high as $975.3 billion during the third quarter of last year.
Though the numbers may indicate that consumers are trying to free themselves from credit card debt, it could also indicate that more lenders are having to write off credit card defaults. When credit card debt is charged off – meaning lenders no longer expect it to be repaid – it is also taken off the revolving consumer credit total.
Overall, consumer credit decreased at a preliminary annual rate of 1.7 percent for October. Revised numbers for the third quarter of this year show that consumer credit dropped at an annual rate of 3.3 percent.
Though revolving and overall consumer credit both decreased in the month, nonrevolving credit increased at an annual rate of 2.6 percent. That could include loans for things like cars, boats or education. Though nonrevolving credit has decreased throughout the year, it has not seen the same percentage drops that revolving credit has.
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