The Federal Reserve has announced that Americans have cut back on credit spending for a 23rd consecutive month, with overall spending falling by $3.6 billion dollars in July.
While that may sound like a massive decrease, it’s only a fraction of what the country as a whole spends using credit, representing a 1.8 percent slip overall. The drop was slightly above analysts’ estimates and follows a $1.02 billion decrease in June.
“The outlook for consumer spending is a guarded one,” Chris Rupkey, chief financial economist at Bank of Tokyo told Bloomberg. “The good news is that consumers are deleveraging and paying down their debts.”
Although credit spending was down overall, car loans were up, as more Americans looked to upgrade their vehicles. While nonessential purchases were down, it appears that many Americans have decided that it’s a great time to buy a car.
While the reduction in spending may not be great news for the overall economy, keeping credit card spending to a minimum is a great way to turn bad credit into good credit. Having a higher score is key to getting a better rate on car loans, mortgages and more credit cards.