Consumers are being more frugal, leading to a slowdown in credit card spending growth, an expert has stated.

• The Federal Reserve's latest consumer credit report indicates that revolving debt, primarily credit card balances, decreased by 1.2% in August.
• Despite the slowing growth of credit card spending, it is uncertain if the August contraction indicates a permanent change in consumer behavior.

Recent indications suggest that consumers may be reducing their credit card debt.

The Federal Reserve's G.19 consumer credit report, released on Monday, showed that revolving debt, which mainly consists of credit card balances, decreased by 1.2% in August compared to the same month last year. In contrast, nonrevolving debt, including auto loans and student loans, increased by 3.3%.

"Recently, consumers have been adopting a more frugal spending approach due to prolonged high inflation and interest rates, according to Ted Rossman, Bankrate's senior industry analyst," he said.

Credit cards are one of the most expensive ways to borrow money, with the average credit card currently charging more than 20%, which is near an all-time high.

Rossman stated that the fork in the road is whether or not you carry a balance on your credit card. Those who pay their bill in full every month can enjoy cash back and travel rewards without accruing interest, while those who carry debt from month to month risk falling into an expensive debt cycle.

Rossman stated that while consumer spending can benefit the economy, it can negatively impact your personal finances if you have credit card debt and are paying high interest rates.

A more common lifestyle choice among adults is being a "childless cat lady." Only 33% of millionaires consider themselves wealthy. Nearly half of young adults experience "money dysmorphia."

This could be 'just a blip'

LendingTree's chief credit analyst, Matt Schulz, stated that it may be too early to determine if August's contraction represents a significant change in consumer behavior, as it could simply be a temporary fluctuation.

Despite a slight decrease in spending this year, "it's not a significant reduction and I don't believe it's an indication of a long-term trend," he stated.

""I anticipate that the NY Fed debt data, which will be released next month, will reveal that debts are still increasing. It would be quite surprising if it didn't," Schulz stated."

The National Retail Federation's analysis of retail sales indicates that lower rates and cooling inflation may motivate more spending during the peak holiday shopping season.

The NRF's chief economist, Jack Kleinhenz, stated that reducing inflation is giving consumers more spending power, and the anticipated interest rate cuts from the Fed will improve the consumer outlook in the future.