The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards , or use our CardMatch™ tool to find cards matched to your needs.

A two-month surge in credit card spending screeched to a halt in July, as Americans shed more than $3 billion in card debt, according to new data from the Federal Reserve.

CONSUMER CREDIT CARD DEBT PLUNGES IN JULY Americans’ credit card debt plunged by more than $3 billion in July, after increasing for the two previous months. The chart below graphs Americans’ credit card debt totals from their peak of $972.2 billion in September 2008 through July 2011, when it fell to $792.5 billion.

The Federal Reserve’s monthly G.19 consumer credit report shows how much debt U.S. borrowers hold. In the report released Thursday, the Fed said that revolving credit — which is nearly all credit card debt — fell 5 percent to $792.5 billion, following a pair of back-to-back gains in May and June.

Credit card balances aren’t the only thing that’s falling: Other recent economic data has been downbeat, showing persistent unemployment and poor consumer confidence.

“We’ve had a lot of really negative incoming economic signals” both at home and overseas in Europe, says Keith Leggett, vice president and senior economist with the American Bankers Association in Washington, D.C. “I think all of that is making consumers anxious. As they become anxious, they’re less likely to spend.”

Still, consumers didn’t cut back on all their shopping in July. Consumers boosted other forms of borrowing, which are also tracked by the G.19 consumer credit report. Nonrevolving debt, which includes auto, student, mobile home, boat and trailer loans, leapt 11 percent to $1.67 trillion. That’s the biggest monthly percentage increase since 2005 and the 14th straight month that the number has increased. The jump was more than enough to push overall consumer credit — revolving and nonrevolving combined — higher for the 10th straight month. Overall debt rose 6 percent — the biggest percentage jump since 2008 — hitting $2.45 trillion in July.

Back to normal?

July’s downturn in credit card spending represents a return to recent form for borrowers and banks. That’s because the increase in card balances seen in May and June represented a break from the longer trend: For more than two years, consumers scaled back their credit card use and paid down balances, while banks approved fewer card applicants, reduced credit lines for existing customers and charged off uncollectable debts. Between September 2008 — when revolving balances peaked at $972.2 billion — and April 2011, $183 billion in revolving debt was eliminated.

With so many U.S. borrowers having filed for bankruptcy stemming from the economic recession, “consumers don’t want to get in trouble again,” says Howard Dvorkin, founder of the nonprofit counseling and debt management agency ConsolidatedCredit.org.

Credit counselors say they’ve been strongly encouraging consumers to pay off their credit card debts as soon as possible. “With so many changes in the industry and the unknown surrounding the U.S. credit downgrade, it is a terrible time to owe a credit card company money,” says Jennifer Wallis, vice president of the Consumer Credit Counseling Service of Central Oklahoma. “When you are in debt, you are at the mercy of the interest rates and changes that happen in the industry. The only sure way not to be negatively impacted by some upcoming changes is to get those cards paid off.”

Bleak data

Other economic reports have highlighted the current challenges facing consumers. The unemployment rate remained at 9.1 percent in August as the U.S. economy added no net jobs. Against that backdrop, it was hard for many Americans to stay upbeat. “Consumer confidence deteriorated sharply in August, as consumers grew significantly more pessimistic about the short-term outlook,” Lynn Franco, director of the Conference Board Consumer Research Center, which tracks sentiment with its consumer confidence index, said in a press release. “The index is now at its lowest level in more than two years,” Franco said.

“When consumer confidence falls as sharply as it did in August, that’s a signal that consumers are going to curtail future spending,” the ABA’s Leggett says.

In a speech Thursday, Fed Chairman Ben Bernanke acknowledged the challenges facing consumers, including a “persistently high level of unemployment, slow gains in wages for those who remain employed, falling house prices and debt burdens that remain high for many, notwithstanding that households, in the aggregate, have been saving more and borrowing less,” Bernanke said. “Even taking into account the many financial pressures they face, households seem exceptionally cautious.”

As long the economic news remains downbeat, credit card holders may be more focused on reducing debt levels and avoiding the use of credit, rather than shopping. In that environment, “they’re going to be more likely to be look at building their savings,” says Leggett.

Tough economic times can have a way of encouraging caution on the part of consumers, experts say.

“Monetary values come into play when you’re knee-deep in a recession,” says ConsolidatedCredit’s Dvorkin.

See related:Consumer credit card balances surge in June