U.S. Credit Card, Other Borrowing Surges Surprising 9.9%

U.S. consumer borrowing – via credit cards and auto and student loans – made the biggest jump in November since the onset of the financial crisis, surging at a 9.9 percent seasonally-adjusted annual rate, according to just-released Federal Reserve figures.
In part, the surge can be attributed to the beginning of the holiday shopping season, but the jump is nonetheless significant.
Credit card borrowing registered an 8.5 percent rate increase to $792.7 billion in November. Since late 2008, credit card debt has fallen from about $976 billion, or a 19 percent decrease over the past three years.
Non-revolving credit – student, auto and personal loans – shot up at an annual rate of 10.7 percent in November to $1.664 trillion.
Revolving and non-revolving credit combined increased 9.9 percent to $2.477 trillion, the fastest monthly increase since November 2001.
The Fed’s report on consumer credit does not include loans secured by real estate, such as mortgages and equity lines of credit.
The jump in credit card debt may signal a bottom in the three-year pullback by U.S. consumers in their outstanding balances as the country struggles with a weak economy, marked by high unemployment and a foreclosure-stymied housing market.
The increase in consumer debt comes as the the savings rate of Americans is dropping. The percentage of incomes put into savings peaked during this recession, staying above 5 percent for most of 2010 and early 2011. But the savings rate has taken a turn downward and now stands at 3.5 percent.
Open credit card accounts held by Americans in the third quarter of 2011 were 23 percent below their peak in the second quarter of 2008, according to a consumer credit update from the Federal Reserve in November.
Balances on those cards were nearly 20 percent below their highest levels in the fourth quarter of 2008, the height of the crisis.

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