The Federal Reserve reported on June credit card balances to show that credit card balances are in decline. Revolving credit - the official name for a variety of balances, but mostly credit card debt - fell from $868.3 billion to $864.6 billion, or $3.7 billion.
Credit card debt typically increases in the summer months as people go on vacations, take time off work, and use their credit cards during the season most well-known for its higher gas prices. This year, nationwide food and gas prices have risen less than anticipated, somewhat reducing total credit card use.
The drop in credit card debt comes after a $7.5 billion monthly decline in May. Credit card debt measured by the Federal Reserve is falling at a rate of 5.1% annually. Some attribute the declines to an improving economy, late write-offs from the Great Recession, and a required change to credit card statements as part of the 2009 CARD Act.
By law, all credit cards must show consumers their total balance and how long it will take to pay off if the customer only makes minimum monthly payments. Since the passage of the CARD Act, credit card debt has been in perpetual annual decline, though it does temporarily rise in single months and seasons through the year.
While credit card debt falls, consumers find new ways to spend. Total installment debt from automotive and education loans surged $10.2 billion to rise at an annualized pace of 7.2%. Total installment debt is up 7.8% in the year-over-year period.