Connect to share and comment
Americans put way more on plastic last month; the Federal Reserve says it’s the largest one-month increase in borrowing in nearly four years.
In spite of fears of a double-dip recession, Americans took on more debt during June. On Friday, the Federal Reserve released figures showing that U.S. consumers increased their borrowing by $15.53 billion, the largest one-month increase since August 2007. It’s three times the amount that consumers borrowed in May, the Associated Press reports.
Credit-card debt, or revolving credit, rose $5.21 billion to $798.29 billion, Dow Jones Newswires reports. Non-revolving credit, which includes loans for cars, mobile homes and tuition, shot up by $10.32 billion to $1.648 trillion. The Federal Reserve’s consumer-credit report doesn't track numbers on home mortgages and other real-estate secured loans.
Borrowing is often a sign of confidence in the economy, but experts said the increase in credit-card debt could also signal that consumers are having trouble making ends meet. The AP noted:
Americans have been struggling this year with high unemployment, scant raises and steep gas prices. For the first six months of the year, the economy grew at an annual rate of only 0.8 percent. That's the weakest stretch since the recession officially ended.
While many consumers leaned on their credit cards in June, a separate report this week showed they cut spending that month for the first time in 20 months.
Another possible factor behind the borrowing rise, according to Bloomberg: Unemployment around 9 percent may have convinced Americans to stay in school longer or seek more job training.
More borrowing benefits credit card companies, of course.
MasterCard reported on Aug. 3 that its second-quarter profit rose 33 percent, Bloomberg reports. Spending on its U.S. debit cards increased 19 percent to $98 billion from a year earlier, and U.S. credit-card spending rose 6.1 percent to $129 billion. American Express Co. reported a $1.3 billion profit on July 21.