Americans Scaling Back On Credit Card Debt, Report Says - East Idaho News
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Americans Scaling Back On Credit Card Debt, Report Says

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Getty 100713 creditcard?  SQUARESPACE CACHEVERSION=1381200732155Hemera/Thinkstock(NEW YORK) — A new report by the Federal Reserve shows Americans cut back on their credit card debt in August, making it the third month in a row.

The results, released Monday, showed that money owed by consumers on credit cards fell by a seasonally adjusted $883.4 million in August, or at a 1.25% annual rate. Revolving balances have declined by more than $6 billion in the past three months.

Many people prioritize their credit card bill over other obligations, said Ellen Schloemer, executive vice president of the Center for Responsible Lending.

“If you miss your payment, credit card interest rate double or maybe even triples and so I think people are probably paying those things down before they’re paying down some of their other debts,” Schloemer said.

Though credit card debt has decreased, total consumer debt has not, climbing to a record high due to auto and student loans.

Diane Swonk, chief economist at Merisow Financial and adviser to the Federal Reserve Board, said many auto loans are too good for consumers to pass up. Automakers have a waiver on subprime lending, she explained, and auto loans haven’t been affected by the increase in rates that Americans are seeing in areas like mortgages.

While student loans are also a big problem and inhibit people’s ability to get access to other forms of credit,  Swonk said she expects the student loan debt to drop over the long term.

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