Consumers kept their credit cards in their pockets a bit more often in July and opted to pay for goods and services with cash, according to a new report from the Federal Reserve.
Credit card debt fell 5 percent in July to $792 billion, preventing what would have been three straight months of gains.
Keith Leggett, vice president and senior economist with the American Bankers Association, told CreditCards.com that the debt drop was likely tied to people not spending as often, perhaps as a result of high unemployment and low consumer confidence.
"I think all of that is making consumers anxious," said Leggett. "As they become anxious, they're less likely to spend."
Howard Dvorkin, founder of the nonprofit debt management agency ConslidatedCredit.org, agreed, telling the source that "consumers don't want to get in [financial] trouble again" and are therefore cutting back.
Consumers may also be reducing the frequency with which they spend because they fear going into bankruptcy. This can help consumers avoid having to seek services that help repair bad credit.