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Debt Cut

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Consumers defied business analysts in December by slicing more than $7 billion off revolving debt. The decline was the sharpest one month drop in more than a decade and bucked typical holiday trends. According to the monthly figures released by the Federal Reserve this week, revolving credit, mostly credit card debt, stood at $683.8 billion for December compared to $700.3 billion in June. During December 2000, Americans added nearly $2.8 billion to revolving credit. Revolving credit did rebound in November but crashed last month. The surprise news blew a hole in the consensus that consumers were returning to more normal credit patterns following September 11th. At the end of 2001, American consumers were $1.645 trillion in debt, exclusive of home mortgages.

                          REVOLVING CREDIT HISTORICAL
                                  ($billions)
           Dec 01    Nov 01     Oct01     Sep01    Aug01    Jul01    Jun01
GRWTH:     -14.2%     9.7       -7.1       0.6     -2.2     -3.7      2.1
$OWED:     $683.8    691.9      686.4     692.7    693.5    698.1    700.3

           May 01    Apr01      Mar01     Feb01    Jan01    Dec00    Nov00
GRWTH:      4.5%     14.2%      11.9       20.8     11.6     5.0      10.9
$OWED:     $699.0    697.6      688.2     681.4    670.3    663.4    660.6

Source: Federal Reserve; revised figures as of 02/07/02; For complete
historical data visit www.carddata.com.

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