Credit Card Debt Shrinks at Fastest Rate in 30 Years in February

The outstanding balances on Americans’ credit cards shrank by almost 10 percent in February, the largest decline since 1978.

The Federal Reserve Tuesday, in its monthly report on consumer credit – also called the G.19 – said that $7.8 billion in revolving credit balances disappeared in February, an annual rate of 9.7 percent. Revolving credit as defined by the Fed is comprised principally of credit cards.

Young Kim, an analyst for Stone & McCarthy Research, wrote in an investment note that the contraction represents "less available credit, less consumer demand for credit, and consumers’ new found propensity to pay down debt."

Credit card debt has been contracting over the past several months in the U.S. In December, the Fed said that revolving debt shrunk at an annual rate of 8.2 percent, sending the total contraction for the fourth quarter to 6.2 percent. Although there was an uptick in January – a 2.4 percent expansion – credit card debt is trending lower.

Total debt outstanding in the U.S. contracted by $7.5 billion, or at an annual rate of 3.5 percent, in February. The G.19 report does not include debt backed by real estate.

Non-revolving credit, like installment loans associated with auto and student loans, expanded by $310 million in February, a 0.2 percent annual rate.

At the end of February, total consumer credit outstanding in the U.S. (excluding real estate loans) stood at $2.564 trillion.