Consumer Credit Declines 5th Straight Month - Update
Total consumer credit
declined by an annual rate of 1.75% in August 2010, according to the
Federal Reserve. This monthly decline followed revised annual decreases of 2% in July 2010 and 0.9% in June 2010.
Non-revolving, Revolving Credit Continue Trends
Non-revolving consumer credit, which grew at a revised annual rate of 0.7% in June 2010 and 2.6% in May 2010, increased 1.2% in July 2010. Meanwhile, revolving consumer credit, which sharply fell at an annual rate of 7.2% in July 2010 and 7.2% in June 2010, continued the recent trend by dropping 7.2% in August 2010.
On a monetary basis, Federal Reserve estimates indicate that during the month of August 2010, total consumer credit decreased annually from $2.49 trillion to $2.41 trillion. Revolving credit, which mostly consists of credit card debt, fell from $901.9 billion to $822.2 billion. Non-revolving credit, which consists of loans and financing, grew from 1.58 trillion to $1.59 trillion.
Borrowing Losses Steepen
As opposed to consumer credit, which has fluctuated in somewhat of a seesaw pattern in the past year (especially the non-revolving portion), consumer borrowing has been in a general pattern of decrease since early 2008, according to Federal Reserve estimates. This pattern continued in July 2010, as
consumer borrowing fell at an annual rate of 14.7%, from $754.3 billion to $662.9 billion. This followed a one-month dip in annual loss rate from 12.1% in May 2010 to 6.7% in June 2010.
Natl APR Dwindles
The national average credit card annual percentage rate (APR) on August 25, 2010
was 14.35%, down slightly from 14.42% on July 28, 2010 and down a bit more from 14.62% on February 25, 2010. According to
CreditCards.com, some online offers for First Premier Bank's Centennial Classic card showed an APR of 59.9%. That compares with the card's existing rate of 23.9% that some applicants will continue to find, depending on how they reach the Centennial Classic offer through the internet.
