Total consumer borrowing fell $3.3 billion in July from June, the first decline since August 2011, according to the Federal Reserve.
Credit card use declined for the second straight month, indicating many consumers are still cautious as a result of high unemployment and slow economic growth. The drop in card debt offset a small increase in student and auto loans.
Overall borrowing for July is at a seasonally adjusted $2.7 trillion. The Fed also said Americans borrowed much more than previously estimated after it revised consumer borrowing data back to December 2010. June's figure, increased to $2.708 trillion, or $130 billion higher than initially thought, was far above pre-recession marks.
Consumer debt declined even though Americans boosted their spending in July by the most in five months, according to government data released last week. But the job market has weakened from the start of the year, keeping downward pressure on spending. Employers in August added just 96,000 jobs, down from 141,000 in July and well below the average 226,000 jobs a month in the January-March quarter.
Consumers have been using credit cards much less since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In July, it was $850.7 billion — or 17% lower.
During that same time, student loan debt has soared. Non-revolving credit, the category that includes auto and student loans, jumped to $1.85 trillion in July from $1.56 trillion in July 2008.
Student loans totaled $914 billion in the April-June quarter, according to a separate report from the Federal Reserve Bank of New York. That's up from $611 billion in the July-September quarter in 2008, an increase of nearly 50% over the past four years. Much of the increase in student loans is a result of high unemployment, which has led many Americans to seek better education and skills in a more competitive labor market.
Overall, Americans' finances are improving, the New York Fed said in its report. Fewer people are falling behind on their mortgages or credit card debt.
Consumers also are saving more. Americans saved 4% of their after-tax income in the second quarter. That's up from 2.5% when the recession began.