According to the Federal Reserve’s Friday report, US credit card debt continued to fall in June, after declining three months after the coronovirus epidemic.
The report shows that consumer revolving debt – consisting mostly of credit card debt – fell from $ 994.7 billion in May to $ 992.4 billion.
Credit card balances reached an all-time high in February, just before the coronovirus epidemic began to affect consumer spending and bank debt, but fell below the trillion-dollar mark in May – after September 2017 Its lowest level, CreditCard.com reported.
The decline in credit card debt underscores how the epidemic affected consumer spending habits, as households did not want to take on additional debt.
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According to the Commerce Department’s Bureau of Economic Analysis, the personal savings rate in June was 19%.
The decline in credit card balance results in banks tightening the terms of their credit card debt. Some 60% of the banks cited in the Fed’s July Senior Loan Officer opinion poll said they were locked in on the credit limit, while about 60% needed a higher credit score.
Similarly, protections granted to many US consumers through the CARES Act, passed in March, prevent large-scale delays from appearing on credit reports and future losses for credit, the Federal Reserve Bank of New According to a second quarter report from York.
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“The protection afforded to American consumers through the CARES Act has prevented large-scale delays on credit reports and damaged future credit access,” said Jole Sculley, administrator of the Center for Microeconomic Data of the New York Federation. “However, these temporary relief measures can pose very real financial challenges that Americans may experience as a result of the COVID-19 epidemic and the subsequent economic downturn.”
According to the Fed’s Friday report, the category of debt covering credit cards was offset by an increase in the category covering auto loans and student loans, which increased $ 11.3 billion, or 4.3%.
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Consumer lending is closely watched for signals that may send consumers about their willingness to borrow to support their spending, which accounts for 70% of US economic activity.
The Associated Press contributed to this report.