Revolving credit balances in the U.S. grew in July, but at a much slower pace than a month earlier, as a rise in virus cases caused consumers to be more cautious about spending.
Consisting mostly of credit card debt, revolving credit balances grew at an annual rate of 6.7%, the smallest month-to-month change since April, when balances shrank, according to the Federal Reserve’s latest consumer credit report, released Wednesday. July’s increase of $5.6 billion—the third straight gain—brings balances to $998.4 billion, closer to the pre-pandemic peak of $1.1 trillion.
Consumers used their credit cards less during the worst of the pandemic, with fewer opportunities to spend and a sharper focus on their financial situation. That changed this spring, as restrictions lifted and consumers ventured out to spend money on things they couldn’t have earlier in the pandemic, sending revolving credit balances up. But virus cases started to surge again this summer because of the delta variant, government data shows, and that’s caused consumers to think twice before dining out or travelling. Once again, caution took hold, and the places where consumers used their credit cards became limited, wrote Shandor Whitcher, an associate economist at Moody’s Analytics, in a commentary Wednesday.
Non-revolving credit balances, including car, personal, and student loans, also increased at a slower rate in July, climbing an annualized 4.1%, to $3.3 trillion, a deceleration from June’s growth of 7.2%.
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