$827.8 Billion in Outstanding Consumer Revolving Credit in July
According to the Federal Reserve, outstanding consumer revolving credit balances declined for the 24th straight month in July.
In August of 2008, outstanding consumer revolving credit hit a high of $973.6 billion. Even though the "Great Recession" started in December of 2007, revolving credit balances continued to soar as many people used credit cards and any money left on their HELOCs (Home Equity Line of Credit) to make ends meet.
FYI - "revolving credit" refers to credit that continues to be available to you when you pay off your outstanding balances. This can include credit cards or home equity lines of credit.
From August of 2008 until July of 2010, outstanding consumer revolving credit has declined each and every month. There are three reasons for this:
1) Credit markets have tightened considerably over the past couple of years.
2) Declining real estate values mean that many people aren't eligible to take out HELOCs, because they simply have zero to little equity in their homes.
3) Many Americans have been saving more and paying off debts since the onset of the recession in December of 2007. Many Americans have been aggressively paying off expensive credit card debt over the past couple of years.
Over the past two years, outstanding consumer revolving credit balances have declined by approximately 15%.
Nonrevolving credit (car loans, etc) has increased slightly over the past couple of months. In June, total outstanding nonrevolving credit in the country was $1.590 trillion. In July, this number ticked up slightly to $1.591 trillion.
Source: FederalReserve.gov - Consumer Credit Historical Data
Filed under: General Market News