Consumer credit card balances fell for the second straight month, according to data released Friday by the Federal Reserve. However, it's unclear whether consumers are still paying down their holiday debt or are cutting back on spending with credit.  

The Federal Reserve's latest G.19 consumer credit report showed a 3.3% drop in revolving debt as cardholders shied away from racking up more debt. Revolving debt, which is made up almost entirely of credit card debt, declined by $2.2 billion in February to $798.6 billion.

February's drop in credit card debt defied experts' expectations that card balances would rise. "It's always difficult to tell," says Paul Edelstein, director of Financial Economics at IHS Global Insight. However, the economy showed significant improvement in February and experts predicted that cardholders would respond to the good news by carrying bigger balances.

The Fed's monthly G.19 consumer credit report also looks at nonrevolving debt, which includes auto loans, student loans and loans for mobile homes, boats and trailers. Nonrevolving debt went up 7.7% to $1.7 trillion. That was enough to overwhelm the drop in credit card debt, so overall consumer credit -- the combination of both revolving and nonrevolving debt -- increased by 4.25%, hitting $2.5 trillion.

Cardholders spend, but not on plastic
It's possible that cardholders may just be busy paying down the debt they piled up during the holidays, agrees Edelstein. However, he expects that balances will eventually rise. "I don't think consumers are retrenching either in their spending habits or their willingness to take on debt." After all, spending was robust in February, he adds.

Indeed, consumer spending rose by nearly a full percentage point in February, according to the Bureau of Economic Analysis, and retail sales rose significantly as well, says the National Retail Federation.

However, some experts worry that rising gas prices may be dampening consumers' enthusiasm. "While February sales certainly present continued reason for optimism, retailers are paying close attention to rising gasoline prices, which are forcing millions of customers to spend a significant portion of their income filling their gas tanks," said NRF President and CEO Matthew R. Shay in a statement.

Gas prices rose steadily in February, according to Consumer Reports, and experts say that can have a big effect on consumers' ability to take on more debt. "When gas prices go up, that works against consumers' ability to afford more debt because it takes money out of their pocket," says Michael Walden, a professor of economics at North Carolina State University. It also affects them psychologically, he says. When consumers drive by signs with $4 gas every day and see the numbers go up when they fill their tank, they start to pull back on their spending. "It really has an overweighted impact on consumer confidence."

Uncertainty about the economy's future also plays a major role in consumers' willingness to take on debt. "Consumers don't like it," says IHS Global Insight's Paul Edelstein, and neither do businesses. "They feel better when they have a handle on what their job prospects are going to be, what their income is going to be, what their taxes are going to be." And even though there has been good economic news on the jobs front, there are a number of uncertainties on the horizon, he says, including the 2012 elections.

That said, credit card lenders are feeling notably more optimistic, according to FICO's quarterly survey of bank risk professionals. The survey found that fewer lenders expect consumers to miss their credit card payments and a larger number expect to hand out more cards than they did the first several years after the recession. "They need new customers," says Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO labs. "Lenders have to get back to lending because basically they make money by lending." 

That could mean more cardholders -- and more debt -- in the future, especially as lenders become more aggressive in scoping out new customers. "In the FICO business, we're seeing an uptick in the use of FICO scores in prospect marketing," adds Jennings (which, in industry-speak, means lenders are aggressively looking for new cardholders). "We've also seen a recent uptick in the volume of scores used for mailings and credit card solicitations so that's another indication lenders are willing to lend."