Credit debt decreases $1.3B in June as Americans eliminate debt

According to new reports, consumer credit in the U.S. dropped $1.3 billion in the month of June. The Federal Reserve notes that this is coming after a $5.3 billion dip in May. As Americans work on their reducing their credit card debt, financial analysts expected consumer credit to fall $5.3 in June due to the slow job market.

“The consumer has some tough sledding ahead,” chief U.S. economist at MFR Inc. Joshua Shapiro told Bloomberg. “Without any job growth, it’s going to be difficult to generate the kind of income growth we need to generate consumer spending growth.”

About 70 percent of consumer spending accounts for economic growth. Americans are currently more focused on rebuilding their savings as the unemployment rates climbs to 9.5 percent. The $1.3 billion deficit in June is the lowest recorded since October 2005.

Consumers looking to reduce their credit card debt and increase their credit scores are advised to stay on top of payments. Debt consolidation is another way card holders can condense their interest rates into one for lower monthly bills.