Americans are slowing down on their credit card spending

Americans are slowing down on their credit card purchases, according to recent data from the Federal Reserve’s consumer credit report.

In August, revolving debt fell to 1.2%, the Fed’s data suggests. Meanwhile, non-revolving credit, which consists of auto and student loans, grew by 3.3%, following an increase of 5.2% in July.

This dip in spending comes after credit card debt climbed to a record $1.14 trillion for the second quarter of this year, in August, according to the Federal Reserve Bank of New York. That’s up by roughly $27 billion compared with last year.

The average American has $6,329 in credit card debt, up 6% from $5,947 a year earlier, according to TransUnion’s second-quarter Credit Industry Insights Report.

On the other hand, consumers have been making larger efforts to save their earnings. The U.S. saving rate in August was reported to be 4.8%, a minor decrease from 4.9% in July. However, the saving rate was previously at 2.9%, per Reuters.

The Federal Reserve data also found that overall consumer credit increased at a 2.1% annual rate, which is down from 6.3% in July. Meanwhile, total credit outstanding rose by $8.9 billion in August after it jumped by a revised $26.6 billion in July — the largest increase since October 2022.

Credit cards are known for being one of the many methods for borrowing money to pay off large expenses. The average credit card currently charges more than 20%, per CNBC.

The drop in credit card spending by consumers comes after spending habits have been adjusted following the periods of inflation and the increase in interest rates, Ted Rossman, the senior banking analyst at Bankrate, said to CNBC.

“Consumer spending is good for the economy, but it’s not good for your personal finances if you’re carrying credit card debt and paying a hefty interest rate,” Rossman said.