U.S. consumers took on $1 billion more in debts in April, even as credit card balances declined for the 19th straight month, according to the Federal Reserve's monthly G.19 consumer credit report.
U.S. consumer credit - which does not include real estate loans - increased to $2.44 trillion in April, a 0.5% annualized rate. It was only the second increase in outstanding debt in the past 14 months.
Non-revolving credit, such as auto loans, student loans and personal loans, rose $9.4 billion in April, or a 7.1% annualized rate, according to the report.
But revolving credit - almost entirely credit card balances - fell 12% to $838 billion in April from $846.5 billion in March, continuing a downward streak that began in October 2008. At its peak in September 2008, credit card debt stood at $975.7 billion.
The drop means the average U.S. household with card debt - of which there are roughly 54 million, according to government data - has eliminated roughly $2,550 in card debt during that period, as borrowers either paid down accounts or had it charged off as uncollectable.
Many analysts do not expect card debt to rise any time soon given lingering high unemployment. Although the unemployment rate fell to 9.7% in May from 9.9% in April, nearly all of the improvement came from hiring of temporary census workers. Those jobs will mostly end in a few months.
The latest data from Fitch Ratings, see story, showed that charge-off rates - or the percentage of card balances banks have given up on collecting - rose to 11.1% in May from 10.93% in April, amid the troubled jobs market and higher personal bankruptcy filings.
As banks abandon their efforts to recoup some unpaid debts, revolving debt as a whole continues to fall. "Charge-off rates have been holding steady at over 10 percent for a full year now, so the pressure on U.S. consumer credit quality is still clearly evident," says Fitch managing director Michael Dean.