Americans cut credit card debt in October, Federal Reserve says
Over the past year, many Americans have been experiencing troubles with credit card debt that have led them to reduce their spending and cut borrowing.
However, the latest release from the U.S. Federal Reserve Board suggests that while credit card debt was reduced again in October, borrowing increased.
For the 26th consecutive month, consumers made big cuts to their revolving credit, the type of credit card debt typically reserved for monthly bills and other small payments. Among the reasons for the decrease was a reduction in spending, although the car industry did see sales rise to their highest level in over a year, Bloomberg reports.
“Consumer finances are progressively improving, which is a good thing, but maybe not as much as these numbers indicate,” Gregory Daco, a senior economist at IHS Global Insight, told the news source.
Despite the reduction in credit card use and debt, consumers continued to borrow, as non-revolving loans – the kind generally used for large purchases such as a mortgage or vehicle down payment – rose for the second straight month.
This type of credit climbed by nearly $4 billion, slightly less than the $5.6 billion reduction Americans made in their credit card debt.