However, in a more positive sign, the Fed revised substantially higher its estimate for credit growth after it revised consumer borrowing data back to December 2010. June's figure was increased to $2.708 trillion, or $130 billion higher than initially thought. It's also well above pre-recession levels.
The data follows a report on Friday that showed U.S. jobs growth slowed sharply in August, setting the stage for the Federal Reserve to pump additional money into the sluggish economy as soon as this week.
Some analysts said concerns over the shaky economy might be making Americans less willing to run up debts - or creditors less willing to give them loans. "It may be the case that consumers and lenders were becoming more tentative over the summer," analysts at Credit Suisse said in a report.
Credit has been expanding almost continuously since mid-2010 as the country recovered from the 2007-2009 recession.
Credit data can be tricky to interpret because cutting back on debt is not always a sign of pessimism. People might be relying less on credit card debt to buy things because they are earning more money.
But the trend in credit card debt is looking increasingly worrisome. Revolving credit has now declined in three of four months through July. That had not happened since early 2011, and underscores the wobbliness seen in the economy in recent months as hiring has slowed and growth in factory activity has declined.
"(The data) looks consistent with the lackluster gains in consumer spending reported elsewhere," JPMorgan economist David Silver said in a note to clients.
Consumer debt declined, even though Americans boosted their spending in July by the most in five months, according to government data released last week.
Still, the job market has weakened substantially from the start of the year, which is keeping downward pressure on spending. In August, employers added just 96,000 jobs, down from 141,000 in July and well below the average 226,000 jobs a month in the January-March quarter.
Consumers have been using credit cards much less since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In July, it was $850.7 billion or 17 percent lower.
During that same time, student loan debt has increased dramatically. The category that includes auto and student loans, along with other loans for items such as boats, has jumped to $1.85 trillion from $1.56 trillion in July 2008.
Student loans totaled $914 billion in the April-June quarter, according to a separate report from the Federal Reserve Bank of New York released two weeks ago. That's up from $611 billion in the July-September quarter in 2008, an increase of nearly 50 percent over the past four years.
Much of the increase in student loans is a result of high unemployment, which has led many Americans to seek better education and skills in a more competitive labor market.
Student loan growth slowed sharply in July. Student loans held by the federal government increased only $1.1 billion. That's the smallest gain since December 2010 and below the recent monthly gain of $5 billion-$6 billion, according to Paul Edelstein, director of financial economics at IHS Global Insight, a forecasting firm.
The slowdown may have occurred because the government's student loan rates were expected to have increased in July. The rate increase eventually was pushed back until July 2013.
Overall, Americans' finances are improving, the New York Fed said in its report. Fewer people are falling behind on their mortgages or credit card debt.
And consumers are saving more. Americans saved 4 percent of their after-tax income in the second quarter. That's up from 2.5 percent when the recession began.
The weak job market is putting more pressure on the Federal Reserve to provide more help to the anemic economy. Fed officials will meet Wednesday and Thursday. Economists expect the central bank to announce another round of bond buying to put downward pressure on long-term interest rates.
The economy is growing too slowly to boost business and consumer confidence and spur sustained gains in spending and hiring. Overall economic growth slowed to an annual rate of just 1.7 percent in the April-June quarter and analysts don't expect much of a pick-up for the rest of the year.
Overall, Americans have been steadily paring debt since the financial crisis. Household debt, including mortgages and home equity lines of credit, has declined for 16 straight quarters to $12.9 trillion in March, according to a separate Fed survey on consumer finances. That's down from $13.8 trillion in March 2008.
Some of that debt has been removed by defaults, such as foreclosures. But Americans are also repairing their finances by paying down debts.
The Fed's monthly consumer credit report covers auto loans, student loans and credit cards. Unlike the quarterly Fed report, it excludes mortgages, home equity loans and other loans tied to real estate.