Consumer Credit Plunges Record 8.5% In November

U.S. consumers sharply reduced their debt in November, the Federal Reserve reported today. Total seasonally adjusted consumer debt fell $17.49 billion, or at a 8.5% annual rate, in November to $2.46 trillion. This is the record tenth straight monthly drop in consumer credit. Consumers have retrenched since the financial crisis hit in full force in September 2008. Credit has fallen in every month except January 2009.

In the subcategories, credit-card debt fell $13.7 billion, or 18.5%, to $874.0 billion. This is the record 14th straight monthly drop in credit card debt. Non-revolving credit, such as auto loans, personal loans and student loans fell $3.8 billion or 2.9% to $1.59 trillion.

There are two factors behind this. The continued demand to hold cash, and the Fed's tight money policy, which means there is less money to lend.