Overall consumer credit – credit card balances and other loans not tied to real estate – continued slipping in June – as Americas persist in reducing their debt in the midst of a weak labor market and sluggish economic recovery. Credit card balances declined for a 21st month – to their lowest level since late 2005.

Credit Card Debt Falls for 21st Month in June, Fed Reports

Credit Card Debt Falls for 21st Month in June, Fed Reports

Credit cardsOverall consumer credit – credit card balances and other loans not tied to real estate – continued slipping in June – as Americas persist in reducing their debt in the midst of a weak labor market and sluggish economic recovery.

Credit card balances declined for a 21st month – to their lowest level since late 2005, according to the Federal Reserve’s update for June 2010.

Revolving credit dropped another 6.5 percent in June to $826.5 billion, compared to the previous month.

Both revolving and non-revolving credit – mostly auto and personal loans – fell $1.3 billion to $2.418 trillion, the Fed reported.

However, the consumer credit total for May was revised sharply higher to a decline of $5.28 billion, compared with the original estimate of a drop of $9.15 billion.

The decline for June was less than economists forecast, but the persistent slide in consumer credit – even just a 1 percent slip as in June compared to the previous month – added to other recent sobering government reports.

On Tuesday, U.S. Commerce reported that the personal savings rate – the amount Americans don’t spend from their income – increased to 6.4 percent in June, the highest level since June 2009.

Overall, consumers are borrowing less, paying down existing debt or saving more – all factors contributing to a slowdown in the recovery from a severe recession and financial system crisis that erupted in the fall of 2008.

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