US consumer credit decreased at an annual rate of 5% in June 2009 and 5.25% in Q209, according to statistics released by the the Federal Reserve Board. These figures represent a $10 billion drop from a revised $2.49 trillion in May to $2.48 trillion in June, and a $30 billion drop from $2.51 trillion in Q1 to $2.48 trillion in Q2.
Revolving credit, which primarily consists of credit-card debt, fell 0.2% from an adjusted $913 billion in May to $911 billion in June, and fell 1% from $922 billion in Q1 to $911 billion in Q2. Non-revolving credit, which consists of loans and financing, fell 0.6% from an adjusted $1.58 trillion in May to $1.57 trillion in June, and fell 1.2% from $1.59 trillion in Q1 to $1.57 trillion in Q2.
In addition to reducing their credit-related debt, US consumers are also reducing their borrowing. The Federal Reserve said that consumer borrowing dropped 12% in May 2009, from $783.3 billion to $775.5 billion, writes Retailer Daily.
Consumers decreased their credit at a significantly higher rate in June than they did in May, when consumer credit fell 1.5%. They also picked up the quarterly pace of credit reduction, as consumer credit fell 3.6% in Q1. In contrast, consumers reduced borrowing at a slower rate in May than in April, when consumer borrowing fell 16%.
Reductions in consumer credit and borrowing figures suggest the US population is continuing to cut back on spending and more carefully manage finances as the economic recession continues.
In addition to changing consumer behavior, Mintel data also revealed that banks and credit-card companies are cutting back on offers to Americans and encouraging them to spend their own money through the use of debit cards.