Credit Card Debt Still Sliding, But Car and Student Loans Jump

U.S. consumer credit, both credit card balances and other types of non-revolving loans, rose 3.6 percent in September after a significant decrease of 4.7 percent the previous month, indicating that Americans took out more loans to purchase cars and pay for college tuition.
Non-revolving credit — primarily auto, personal and student loans — drove the overall jump in debt with a robust surge of 5.8 percent to $1.66 trillion, according to the latest consumer credit update from the Federal Reserve.
But revolving debt, mostly credit card balances, slipped 1 percent to $789.6 billion in September, continuing a slide in the use of plastic that began at the height of the financial crisis in late 2008. Since then, credit card debt has fallen from about $976 billion, or a 19 percent decrease over the past three years.
The decline reflects a greater willingness by Americans to reduce credit card balances and restrain unnecessary spending in economic hard times. The major credit card issuers have reported a reduction in late payments or delinquencies and have been putting aside less capital for projected losses from bad loans.
However, the more than $7 billion jump in overall credit – to $2.45 trillion — was higher than the $5 billion increase forecast in a Bloomberg survey of 32 economists.
The increase in non-revolving debt backed a jump in auto sales, which ran at a 13.04 million annual rate in September, up from a 12.1 million pace a month earlier, reported Ward’s Information Products. Auto sales continued a healthy pace in October, automakers said last week.
The non-revolving total included a $14.3 billion increase to $406.1 billion in credit issued by the federal government, primarily student loans.
The Fed’s report on consumer credit does not include loans secured by real estate, such as mortgages and equity lines of credit.

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