BIRMINGHAM, Ala. Overall credit card debt fell for the first time this year during the month of March, according to data just released by the Federal Reserve.
Revolving credit, made up mostly of credit card debt, decreased in March at an annual rate of 2.4%. It now totals $846.2 billion, a decrease of $1.71 billion from February, reports Lowcards.com.
“The drop in credit card debt appeared to be the result of slower-than-anticipated consumer spending,” said CEO Bill Hardekopf. “Cardholders may be showing concerns about taking on more debt at a time when their payroll taxes are increasing. Consumers have done a good job reining in their free-spending habits that were present before the economic downturn. It now seems they are more cautious about buying things they cannot afford with high interest credit cards. In addition, there seems to be a little bit of concern about their income, which has decreased as a result of these new payroll taxes. These figures are from March so consumers may have had time to make some slight adjustments in their spending habits as a result of these new taxes.”
Hardekopf reminded that issuers made a number of changes after the economic downturn, cutting credit limits on millions of credit card accounts, cancelling a number of risky accounts and tightening their approvals. “So it is fairly difficult for someone with fair or poor credit to be approved for a new credit card. This may be playing a part in the overall decrease in credit card debt which has taken place over the last few years,” he said.
