According to the Fed, revolving consumer credit fell by an annual rate of 13.3 percent in September. Most of revolving consumer credit is represented by credit card debt, and a drop could mean that consumers are paying it off.
Ironically, it could also mean that people are having a hard time paying off their credit card debt. Charge offs, which are credit card debts written off by lenders, also play into reductions in revolving consumer credit. According to a recent report from Fitch Ratings, credit cards that are more than 60 days delinquent increased, which could lead to more charge offs.
Whether it’s because people are paying or can’t pay their credit card debt, the drop in revolving consumer credit in September reflects a trend that started during the fourth quarter of 2008. Every quarter since that time has seen a drop in revolving consumer credit. The third quarter of this year saw it fall by 10 percent.
It terms of a dollar amount, revolving credit dropped from $898 billion to $889 billion from August to September.
Along with revolving consumer credit, non-revolving credit saw a dip in September. That measure of consumer credit, which includes things like auto loans, dropped at an annual rate of 3.7 percent during the month. In dollars, non-revolving credit fell from $1.57 trillion to $1.56 trillion.
Overall, consumer credit dropped at an annual rate of 3.7 percent during September while falling by 3.8 percent for the third quarter. From August to September, consumer credit decreased from $2.47 trillion to $2.45 trillion. Like revolving credit, total consumer credit has been falling since the fourth quarter of 2008, when it saw a 0.4 percent decline.
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