Credit Card Borrowing Falls for 16th Month, But Stabilizing

Mckinnell/GettyCredit card borrowing fell for the 16th consecutive month in January, but the decline was the smallest since July — and overall consumer credit with auto loans included managed the first increase in a year, the Federal Reserve reported today.
The unexpected increase in combined revolving and non-revolving credit was a surprise to analysts who expected a 12th-month with a decrease because of predominantly tight credit standards among lenders. The Fed reported this week that most of its 12 districts “indicated banks remained cautious about lending.”
Credit cards and other types of revolving credit fell $1.66 billion or 2.3 percent, a much smaller drop than the 12.9 percent plunge in December.
It was auto sales the propelled the overall consumer credit numbers. Borrowing representing car and truck loans and other types of non-revolving debt gained 5 percent, or $6.62 billion, and followed a 3.7 percent rise in that category in December.
Altogether, consumer borrowing made its first increase after 11 months of declines with an overall jump of $4.96 billion in January, a climb of 2.43 percent following a revised 2.23 percent drop in December.
The 11 months of falling overall consumer credit was a first since the Federal Reserve began keeping track in 1943.
The stabilizing in credit card borrowing could be the result of an all-out blitz by credit card mailed offers during the fourth quarter of 2009.
U.S. households received 398.5 million credit card offers in the fourth quarter, a 46 percent increase from the 272.5 million solicitations during the third quarter, according to Synovate, which tracks credit card volumes and rates.

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