(Bloomberg) -- US consumer debt outstanding unexpectedly fell in November by the most in over a year as credit-card balances plunged.
Total credit dropped $7.5 billion after a revised $17.3 billion gain in October, according to Federal Reserve data released Wednesday. The median estimate in a Bloomberg survey of economists called for a $10.5 billion advance. The figures aren’t adjusted for inflation.
Outstanding credit-card and other revolving debt decreased $13.7 billion, the most since early in the pandemic, after surging a month earlier. Non-revolving credit, such as loans for vehicle purchases and school tuition, increased $6.2 billion, the Fed’s report showed.
The data suggest consumers are making an effort to pay down credit-card balances as borrowing rates remain near a record well above 20%. Americans have relied more on credit in recent years to help support spending amid persistent inflation.
While the Fed lowered its benchmark rate a full percentage point in 2024, officials have indicated a preference for a slower pace of reductions this year. That means Americans will find only modest relief from high rates on credit-card accounts and other forms of borrowing.
Meanwhile, the rise in non-revolving credit likely reflected stronger auto sales, which accelerated in November at the fastest pace in more than three years, based on Ward’s Automotive Group data. They continued to rise in December as lower auto-loan rates and more manufacturer incentives helped lure buyers to showrooms.
The Fed’s report showed rates on credit cards that charge interest stood at 22.8% in November. A 60-month loan from a commercial bank for a new vehicle purchase stood was 7.82%, both down slightly from the third quarter.
--With assistance from Chris Middleton.
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