Consumers slowed their pace of borrowing in August as credit card balances fell for the first time since the winter, the Federal Reserve said.
Outstanding credit, not including mortgages, rose at an annual rate of 5% in August to $3.25 trillion, the Fed said Tuesday. The pace was down from 8.1% annual growth in July and marked the slowest rate of growth since November.
Outstanding revolving credit, which is mostly credit card balances, declined at a 0.3% annual pace, with consumers having about $200 million less on their bills than the previous month. The last time revolving credit balances dropped was in February.
Overall, consumers added $13.5 billion to their outstanding balances, far less than the $20 billion economists had forecast following a surge in spending in July.
The Fed also revised downward July's growth in consumer borrowing to $21.6 billion from the initially reported $26 billion, which had been the biggest increase since 2001.
The slowdown in credit card use was the main reason for August's reduced pace. Outstanding revolving credit had increased at a 7.4% annual rate in July.
Matt Schulz, senior industry analyst at CreditCards.com, said that it was common for credit card spending to fluctuate and that a one-month drop doesn't necessarily mean consumers are slowing their spending over the longer term.
“Maybe what we’re seeing is consumers taking a little bit of a break after going on a nice little shopping spree over the last five months,” he said.
“You want a certain amount of growth to indicate they're confident and to keep the economy humming, but there’s that delicate balance of 'Do people have too much debt?' “ he said.
So-called non-revolving debt, which includes auto loans and student loans, rose in August at an annual rate of 7%. It had risen 8.3% in July.