Credit card debt fell in August

Credit card debt fell in August. According to the latest statistics from the Federal Reserve Board, the amount of nationwide revolving credit, which is typically associated with credit card debt, declined by $5 billion between July and August, from $827.2 billion to $822.2 billion. This drop, which totaled 7.2 percent, was the same proportion observed in July, and slightly less than June's reduction of 7.5 percent.

Meanwhile, total consumer credit, which includes both credit card debt in addition to other borrowings such as auto loans and mortgages – also known as nonrevolving credit – fell about $3.3 billion. This marked a decline of about 1.7 percent at an annualized rate after the Fed revised its estimate of July's fall up to 2 percent from 1.8 percent. Currently, total consumer debt amounts to $2,414.3 trillion.

This was the result of a 1.2 percent increase in nonrevolving credit, which rose from $1.59 trillion to $1.592 trillion, the Fed said.

In recent months, many consumers have attempted to shed some of their credit card debt, and this may be evidenced in declines so far this year of 8.5 percent and 7.2 percent in the first and second quarters, respectively, the Fed noted. In the fourth quarter of 2009, revolving credit tumbled 12.4 percent.

Banks have been more selective about the kind of consumer to whom they will lend money. Many have boosted minimum credit scores for consumers to qualify for loans for both assets and those which may lead to credit card debt. In fact, most types of institutions, such as commercial banks, finance companies, credit unions and savings institutions all tried to scale back their loan volume, while the federal government made a more concerted effort to help borrowers get access to lines of credit.

However, many financial experts are now wondering if all the declines in consumer credit card debt in recent months are due to Americans being more conscientious about paying off their bills or the high national charge off rates. These have remained elevated even as delinquencies in general fell to lows not seen since the beginning of the recession. However, charge offs have also slowed over the summer.