AXP American Express Company

By AnnaMaria Andriotis 

The amount of credit-card debt held by U.S. consumers retreated slightly in January.

Although consumer card balances in January were up 6% from a year earlier, the amount of debt outstanding dropped slightly from December, according to data released by the Federal Reserve on Tuesday. That halted 10 months of consecutive increases.

Outstanding revolving debt, mostly comprising bank and store credit cards, totaled $995.1 billion in January, down from $998.9 billion in December, the data showed.

Such a move down isn't unheard of at the beginning of the year. In January, many consumers are in pay-down mode after racking up holiday credit-card bills.

But it also could reflect an increase in charge-offs of delinquent consumer debt. A three-month moving average of bank credit-card debt through January showed write-offs increased 12% from the three-month period through December, according to Equifax data. The charge-offs were up about 24% from a year earlier.

This comes as missed payments are on the rise, although they remain near historically low levels. Some 3.21% of bank credit-card balances were in default in January, up from 2.52% a year earlier and the highest since July 2013, according to the S&P/Experian Consumer Credit Default Indices.

January's card-balance data mark a pause from what has been a tear in credit-card-debt growth recently. Growth in such debt has been accelerating, rising about 6.5% between December 2015 and December 2016 compared with a roughly 5% increase the year earlier and a 4% increase two years before. In 2012, it increased by just 1.4%.

The credit-card market has become one of the most upbeat consumer lending markets in the last couple of years. Purchases on the four largest payment networks -- Visa, Mastercard, American Express and Discover Financial Services -- increased 8% in 2016 to $3.1 trillion, according to a report this week by ratings firm DBRS.

Lenders have been going head-to-head to get more card users by rolling out more generous rewards programs. Cards are an attractive business because of the double-digit rates that lenders often charge.

Lenders issued nearly 61 million general-purpose credit cards from January through November of 2016, up 11.4% from a year prior and a nine-year high, according to data from Equifax. Total credit limits on these cards were $313.7 billion, up 18% from the previous year -- and at the highest level since Equifax began tracking full-year data in 2006.

Many lenders, including J.P. Morgan Chase & Co. and Citigroup Inc., have also been offering credit-line increases to existing customers.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

(END) Dow Jones Newswires

March 07, 2017 16:51 ET (21:51 GMT)

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