Consumer Card Debt Declined By $1 Billion In April

Despite indications that some lenders are beginning to loosen restrictions on credit card underwriting criteria by extending certain borrowers’ credit lines, the overall pool of credit card loans continues to shrink, according to new Federal Reserve data.

Consumer credit card debt fell by $1 billion in April, continuing the broad trend of consumers relying less on unsecured revolving credit, according to the Fed’s monthly G.19 report released June 7.

Consumer revolving credit, 98% of which is credit card debt, in April totaled $790.1 billion, down 0.13% from a revised total of $791.1 billion in March, according to the Fed.

Credit card borrowing ticked up slightly in December and in March (see story),  but the overall trend of lower credit card receivables continues as consumers steadily pay down debt and take out fewer credit card loans, experts say.

JPMorgan Chase & Co. and Bank of America Corp. during the first quarter were among large banks that increased lines available on credit cards to certain borrowers for the first time since early 2008, according to data from the Federal Deposit Insurance Corp. (see story).

But these increases have not yet amounted to a significant reversal in the broad trend of consumers backing away from credit card debt, Ezra Becker, vice president of consulting and research at the Chicago-based credit bureau TransUnion LLC, told PaymentsSource in an interview.

“Demand for credit (card borrowing) has gone down, and although some lenders are loosening up their criteria for loans to new borrowers, it is not a uniform process among lenders and it is not dramatic right now because the economy continues to be slow,” Becker said.