Consumer credit dropped unexpectedly in September

The amount consumers borrowed from creditors fell in September as consumers continued to either reduce debt or failed to take on new lines of credit.

Consumers across the country cut the amount they owed more or less across the board, prompting the amount owed to lenders to fall by $9.5 billion between August and September, according to the latest monthly statistics released by the Federal Reserve Board. And while in the past, consumers typically cut revolving credit – the type commonly associated with credit cards – the larger decline was caused by a dip in nonrevolving credit – installment loans not including those for mortgages – which dropped $7.3 billion.

"Consumers were cautious over taking on additional debt at the end of the summer after the volatility in the stock markets and the uncertainty caused by the failure of Congress to work together to bring down these trillion-dollar deficits," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, told the news agency.

Consumer credit card debt has been declining significantly for some time now, as fewer consumers may be willing or even able to take on larger balances.