by Alison Storm | 04/9/10

Consumers borrowed less money in February, according to the Federal Reserve. Americans borrowed 5.6% less to $2.45 trillion. This came after a 2.1% increase in January which many believe was reflective of Americans paying off holiday credit card debt. Some experts feel this could slow economic recovery as more Americans focus on paying off debt and less on spending. Revolving credit, which includes credit card use, took a large hit, falling 13.1% in February. The latest report "does point to a lack of confidence on the part of consumers and their caution may well mean this recovery is still a fragile one," said Chris Rupkey in a report by the Wall Street Journal. Rupkey is the chief financial economist at Bank of Tokyo-Mitsubishi in New York.

Another report showed that more Americans are paying their bills on time. Consumer loan defaults and bank card defaults both fell. But some credit card companies say defaults are still running at all-time highs. According to the Wall Street Journal, JP Morgan Chase & Co expects to be in the red all year. is too soon to declare the worst is over for the business, as defaults remain at historical highs. J.P. Morgan Chase & Co.'s credit-card business is losing money. It expects to operate in the red all year.

Reports show that consumer spending accounts for about 70% of the American economy so when households spend less it can be good and bad. It can lower the burden many families have with debt, but it means slower economic recovery. Here are some recent statistics reported by The Street.

• A Mastercard study shows debit card use increased by 11% in the fourth quarter of 2009, while credit card use dropped 13%. Use of Visa debt cards rose 17%.


• Statistics released by Equifax Consumer Credit Trends says that the number of new credit cards issue dropped by nearly half last year.


• Americans are owing less credit card debt. Statistics show that the average balance on Visa, MasterCard and American Express cards dropped to an average of $5,434 from $5,729.


• January research shows that 31% of Americans are paying with cash more often compared to 23% from the year before.