Consumer Borrowing Cools, But Credit Cards Remain Hot

Published on:
11 September 2007 at 06:15 a.m. ET

Written by: Unknown Author –

http://www.insidearm.com/news/00016043-consumer-borrowing-cools-but-credit-cards/

Consumer debt expanded in July by $7.5 billion, or a 3.7 percent annual rate, led by consumer credit card usage, according to data released by the Federal Reserve late Monday in its monthly Consumer Credit report, also called G.19.

Total revolving credit, such as credit cards, increased at a 6.6 percent annual rate in the month to $907.4 billion. It marks the third straight month of substantial credit card debt increases with June’s increase of 6.4 percent and May’s expansion at a 10.9 percent rate.

Overall, however, consumer borrowing slowed considerably from June. Non-revolving credit, like car and education loans, increased only 1.9 percent. The G.19 report does not include mortgages or any loans backed by property. July’s total credit expansion is the smallest since April.

“Consumers have been increasing their use of consumer credit as mortgage-equity withdrawals have shrunk,” Steven Wood of Insight Economics told Bloomberg News.

The consumer credit numbers from June were revised downward as well, from an initially-reported total credit increase of $13.2 billion to $11.9 billion.

The $7.5 billion figure for total debt increase was slightly lower than the $8 billion economists polled by both MarketWatch and Bloomberg had been expecting.

Total consumer credit outstanding in the U.S. now stands at $2.456 trillion.