Credit Card Balances Shrank at a 4.2% Annual Rate in August. The Average Card Rate Is Still 21.19%.

Americans borrowed more in August, but not on their credit cards. The Federal Reserve's G.19 consumer credit release, published on October 7, puts total consumer credit growth at a 1.9 percent seasonally adjusted annual rate for the month. Underneath that single figure the two halves of consumer credit moved in opposite directions: revolving credit contracted at a 4.2 percent annual rate while nonrevolving credit grew at 4.1 percent.

The figures

• Total consumer credit outstanding: $5,196.8 billion, seasonally adjusted.
• Revolving credit outstanding: $1,352.4 billion, falling at a 4.2 percent annual rate.
• Nonrevolving credit outstanding: $3,844.4 billion, growing at a 4.1 percent annual rate.
• Total growth: 1.9 percent at an annual rate, against 4.2 percent reported for July.
• August figures are preliminary and subject to revision.

What the two categories actually contain

The distinction matters for reading the release, and the Federal Reserve's own documentation is specific about it. Revolving credit is the kind a borrower can draw on up to a preset limit and repay in one or more instalments. Credit card loans make up most of it, and prearranged overdraft plans are included. Nonrevolving credit is closed-end: it is repaid on a fixed schedule, and borrowing more requires a new contract. Motor vehicle and education loans make up most of that category, with boat, recreational vehicle and personal loans also counted.

One exclusion shapes the whole series. The G.19 covers credit extended to individuals for household, family and other personal expenditures, excluding loans secured by real estate. Mortgages and home equity borrowing are not in these numbers at all.

What the rate series says

The release also reports terms of credit, which describe the price of borrowing rather than the quantity. For August, commercial banks reported an average rate of 21.19 percent across all credit card accounts and 22.36 percent across accounts assessed interest. The two differ because the first figure includes accounts that carry no balance and therefore pay no interest. Rates on 24-month personal loans were 11.90 percent. New car loans ran 7.54 percent over 60 months and 7.17 percent over 72 months.

The gap worth noting

Card rates above 21 percent sit against a federal funds target range of 3-3/4 to 4 percent, raised a quarter point in September. Card pricing has historically moved with, but far above, the policy rate, and the spread between the two is wide by the standards of the past two decades. The August release does not explain the spread; it only records it.

The G.19 is published monthly at 3 p.m. Eastern, roughly five weeks after the month it covers. The next release is scheduled for November, with September data.