Consumers cut credit card debt to levels not seen in decades

Consumers have cut their total credit card debt significantly from the peak observed at the end of the third quarter of 2008, according to a report from Northern Trust. In total, balances have dropped by about $157 billion in the subsequent two years, to $2.41 trillion.

Businesses and individuals alike have cut their credit card debt so significantly that industry experts are reminded of the private sector reaction to the recession in the early 1990s, the report said. This debt peaked as a percentage of gross domestic product in the first quarter of 2009 at 177.8 percent, but has dropped nearly 10 percentage points by the end of the first half of 2010.

Consumers have cut their credit card debt largely by scaling back or eliminating spending and also increasing the total of their monthly payments since before the end of the recession.