Americans closed accounts as they paid off credit card debt
Consumers have proven in recent months to be more capable of paying off their credit card debt, but now when they do, it seems they are also closing their accounts.
According to the latest quarterly report from the New York Federal Reserve Bank, aggregate consumer debt decreased in the second quarter, as it did in each of the previous six. And as their credit card debt gets paid off, consumers are simply closing their accounts with lenders.
The report said that as of June 30, consumers nationwide owed a total of $11.7 trillion, down 1.5 percent – $178 billion – from the previous quarter and 6.5 percent – or $812 billion – from the peak in the third quarter of 2008. And many consumers closed out their credit cards when their outstanding balances reached zero. The number of open accounts dropped from 385 million to 381 million in the second quarter of 2010.
It seems consumers may have become savvier about their finances, as they have been able to make more on-time payments in recent months. Many major lenders reported fewer delinquencies and charge offs in both June and July.