Credit cards dropping balances as people continue to work on paying off revolving debt

A report regarding consumer credit in December showed that people are making further strides regarding trying to pay off their credit cards in an attempt at debt management.

According to the Federal Reserve Board, revolving consumer credit fell at an annual rate of 11.7 percent during December. Overall, revolving credit - which is mostly credit card debt - declined from $874.5 billion in November to $866 billion in the last month of the year.

The drop in revolving consumer credit may come as a surprise to some, especially since the numbers reflected the time of the holiday shopping season, where people may bust out their credit cards to make purchases. Along with the decline in December, November saw an 18.6 percent drop in revolving consumer credit.

However, given financial constraints, many consumers may have shied away from using credit in order to make purchases. Rather, they could have relied on debit cards and cash. That or they may have cut back on their spending over all during the holiday season.

Total consumer credit dropped at an annual rate of 0.8 percent after falling 10.6 percent in November. On the whole, consumer credit declined $1.8 billion from November to December.

Though overall consumer credit has seen consistent drops for many months, one reason it did not fall by such a large percentage in December is because nonrevolving consumer credit actually increased in the month. Nonrevolving credit was up 5.2 percent, increasing from $1.58 billion to $159 billion. This marks the first increase in nonrevolving credit since October of last year.

Nonrevolving credit includes things like loans for automobiles and mobile homes.