Credit-card debt falls at fastest pace in nearly five years

 WASHINGTON (MarketWatch) -- U.S. households paid down a record $7.9 billion in consumer debt in November, the third month in the past four in which they paid off more debt than they took on, the Federal Reserve reported Thursday.
Consumer debt fell $7.9 billion to a seasonally adjusted $2.57 trillion in November, a 3.7% annualized decline. It's the largest percentage decline in nearly 11 years and is the largest decline ever in dollar terms.
The figures from the Fed do not include debts backed by real estate, such as mortgages or home equity lines of credit. Read the full report.
In October, consumer credit fell $2.8 billion, or 1.3% annualized.
In November, U.S. residents paid down $2.8 billion, or 3.4% annualized, on their revolving credit accounts, the largest decline in credit-card balances in nearly five years.
For other types of loans, such as auto loans or student loans, balances fell by $5.2 billion, or 3.9% annualized. Auto sales fell to the lowest levels in decades in November.
Debt had exploded in recent years, rising 27% since 2003. Debt fueled an unsustainable pace of consumer spending, which the country is now repaying in the form of the most severe recession in generations.
With banks increasingly unwilling to lend to anyone, consumers are raising their savings rate and deleveraging in the face of large losses in their net worth due to plunging house and equity prices.
Rex Nutting is Washington bureau chief of MarketWatch.