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Credit card debt has hit the wall as consumers move revolving debt into mortgages, and slow down a bit on card usage. During September, Americans tacked on a mere $1.4 billion to revolving credit, compared to $4.2 billion last September. Since the first of this year, total revolving credit, mostly credit card debt, has grown by $31.2 billion compared to $44.3 billion for the same period last year. However, more than 90% of the growth this year occurred between January and May. Since June, revolving credit has grown only $1.2 billion, according to preliminary figures released this week by the Federal Reserve. At the same time card credit usage as dropped somewhat, from a 13% annual growth rate for the second quarter (Apr-Jun) to 10% for the third quarter (Jul-Sep), according to CardWeb.com's CardData service. Therefore it appears the record low interest rates for home mortgages (6%-7%) and home equity lines (7%-8%) are siphoning off credit card debt, which carries an average interest rate between 14% and15%. The effect of the September 11th events undoubtedly played a role in the soft September figures as credit card volume collapsed by 20% in the week following the terrorist attacks. But, it appears mortgage originators and not the terrorists are the real reason behind the credit card debt slowdown.
