(Reuters) - U.S. consumers increased their bank deposits and reduced their credit card balances in January, according to data released by the Federal Reserve on Thursday. Deposits and credit card repayments were some of the uses of benefits paid out as part of the government's $900 billion fight against the new coronavirus, according to the data.
In the week to Jan. 27, private bank deposits surged $97.9 billion to a record high of more than $16.3 trillion. The increase was the largest in the past three months.
The increase in deposits since the end of December last year was $226.1 billion. The increase since the beginning of March last year is close to $3 trillion, which means that a four-year increase was achieved in this period.
Consumer loan balances at banks, excluding real estate, fell by $3.5 billion to $1.051 trillion, the lowest level in two years.
The main factor was the continued decline in credit card balances, which account for about half of outstanding loans, to a four-year low of $735.6 billion.
Since March last year, when the lockdown was implemented, credit card balances have declined by over 14% (about $121 billion).
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Although churning is not unlawful, card issuers are opposed to it and consider it unethical. Churners would open several credit cards in quick succession, get the welcome bonus for each new account, and then close or cease using the cards before credit card issuers really caught on and put procedures in place to halt the activity.
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