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CONSUMER CREDIT CARD DEBT CONTINUES TO FALL Consumer credit card debt fell to $794 billion in February. It’s the 29th time in 30 months that consumer card balances have fallen — December 2010 being the only exception in that stretch. The chart below graphs Americans’ credit card debt totals from their peak of $973.6 billion in August 2008 through February 2011.

Consumer credit card balances fell further in February, based on the latest Federal Reserve data, as credit card holders continued to scale back their use of plastic.

Revolving debt levels continued to fall in February, according to the Federal Reserve’s monthly G.19 consumer credit report released Thursday. Revolving debt levels — which are mostly made up of credit card balances — dropped to $794 billion as consumers relied less on plastic.

“This is consistent with the decline in consumer confidence and the political stalemate in Washington over the budget,” says Dennis Moroney, research director in the bank cards division with advisory services firm TowerGroup. “Unfortunately, people are not in a happy state of mind.”

Cardholders have been unhappy for quite some time. Between September 2008 and February 2011, credit card balances declined all but one month — December 2010. That lengthy pullback in revolving debt has been attributed to a combination of factors: consumers spending less and paying off loans, and banks reining in credit limits and charging off uncollectable debt from delinquent accounts. In the wake of the recession, economic fears have kept borrowers careful about letting debt levels get too high.

In its G.19 consumer credit report, the Fed considers the amount of both revolving and nonrevolving debt, which includes auto loans, student loans and loans for mobile homes, boats and trailers. In total, consumer credit increased 3.8 percent to $2.42 trillion in February. Nonrevolving debt shot up 7.7 percent to $1.63 trillion.

Limits on consumer spending

Although the U.S. Commerce Department reported that consumer spending increased 0.7 percent in February — the eighth straight monthly gain and the largest one since October — some experts say spending on plastic will remain limited.

“I do think people are a little more cautious with their use of credit. They saw what happened during the period when we were in the bubble, and now they’re being more judicious with the use of credit. That will be a behavioral change,” says Keith Leggett, a senior economist with the American Bankers Association in Washington, D.C.

Some consumers simply say they hate being in debt. “We decided to pay our debt off after we got sick and tired of sending large payments to credit card companies,” says John Zerges, a chemical company employee in Cincinnati. “We figured if we eliminated all debt from our life, we could eliminate the stress that comes with it.”

Such feelings of financial distress aren’t unusual. After rising in February, consumer confidence fell in March, according to the U.S. Conference Board. “Consumers’ inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions,” Lynn Franco, director of the Conference Board Consumer Research Center, said in a press release.

One reason for those inflation expectations? Global turmoil abroad. Unrest in the Middle East has disrupted the supply of oil and increased gas prices. In turn, higher prices at the pump may reduce consumers’ desire to hit the mall. “That will probably cause people to scale back on spending, especially in discretionary items” or non-essential purchases, says ABA economist Leggett. “For example, if gas prices increase dramatically and people still need to drive, they may just shop less in other areas,” says Theresa Chen, an analyst with Barclays Capital in New York.

“Higher gas prices have already had an impact on entertainment, eating out and going to movies,” says Britt Beemer, chairman of behavior survey firm America’s Research Group.

Additionally, many consumers simply can’t forget their experiences during the recession. That means spending patterns that changed during the downturn may continue. After months of lackluster economic recovery, “it’s been long enough that it may have caused people to make changes in their behavior, consistent with what happened with the Great Depression generation,” Leggett says.

See related: Credit card ownership sees 1st jump since 2008