RISMEDIA, February 9, 2010—(MCT)—Outstanding debts held by consumers fell for a record 11th month in a row in December 2009, led by falling balances on their credit cards, the Federal Reserve recently reported.
Outstanding debts, not including mortgage debt, fell a seasonally adjusted $1.73 billion, or an annual rate of 0.8%, in December after a record $21.8 billion decline in November. The decline was much less than the $9 billion forecast by economists surveyed by MarketWatch.
After decades of steady increases, debts are falling because consumers are paying down balances and because lenders are writing off bad debts as uncollectable.
For all of 2009, consumer debt dropped by 4% from $2.56 trillion at the end of 2008 to $2.46 trillion. It was only the second annual decline since 1945 and the first since 1991, when debts fell 1.3%.
In December, revolving credit debts—largely credit cards—fell a seasonally adjusted $8.5 billion, or an annual rate of 11.7%, to $866 billion. It was the 15th consecutive decline in revolving credit.
For all of 2009, outstanding credit card debt fell 9.5%, the first annual decline on record, dating to 1969. In December, nonrevolving debts, such as auto loans, student loans or personal loans—rose $6.8 billion, or an annual rate of 5.2%, to $1.59 trillion. It was the third increase in the past five months. For all of 2009, nonrevolving debts fell 0.7%, the first decline since they fell three years in a row between 1990 and 1992.
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