Federal Reserve Bank sees U.S. household debt total fall

Across the country, millions of consumers are struggling with high mortgage payments, falling home values and the constant threat of losing their home through foreclosure.

However, the Federal Reserve Bank of New York says many U.S. households reduced their debt during the final months of 2010, even as these problems continued to persist.

The total amount of debt held by consumers was $11.4 trillion at the end of the fourth quarter, down $155 billion from figures observed during the previous three-month span, Bloomberg reports. Households cut debt by $110 billion during this time, continuing a string of reductions dating back to the third quarter of 2008, when this total peaked.

“We appear to be entering a gradual convalescence, as delinquencies begin to subside and some households begin to expand their borrowing again,” said New York Federal Reserve President William Dudley.

Despite the reduction in debt, consumers increase their borrowing for the first time since the fourth quarter of 2008. The number of credit card accounts held by Americans rose to 380 million, up from 378 million the previous quarter.

Overall, the Federal Reserve Bank says the increased borrowing is a sign more consumers are finding their financial footing, and it predicts this trend will help contribute to a gradual economic recovery.