Monday, October 7, 2013

Consumer Credit Grew by $13.6 billion in August

Consumer credit grew by $13.6 billion in August, the fastest pace in three months and above expectations. August’s gain was solely due to non-revolving credit, as revolving credit shrank. Consumer credit is 5.4% above year ago levels.

Revolving credit shrank by $0.9 billion in August, the third month of decline. Credit card spending still remains at depressed levels as customers remain hesitant to take on large levels of credit card debt. With exceptionally low interest rates, customers are shying away from the higher interest fees associated with credit cards.

Non-revolving credit balances continued to grow, increasing $14.5 billion from the previous month, an 8.3% increase. Increasing vehicle sales and swelling student loan demand continues to drive the increases in non-revolving credit. The pace of non-revolving credit may start to slow in the coming months as the consumer digests the slower economic growth seen in the second half of the year.

Read the Federal Reserve release.

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