US Consumers Cut Back On Credit Card Use In June
CHRISTOPHER S. RUGABER
WASHINGTON (AP) â¿¿ Americans cut back on credit card use in June, a sign that high unemployment and slow growth have made some more cautious about spending.
Still, total consumer borrowing increased as many kept taking out loans to buy cars and attend school.
Consumer borrowing rose 3 percent in June from May to total $2.58 trillion, the Federal Reserve said Tuesday. That's just below the all-time high reached in July 2008.Auto and student loans rose 7 percent to $1.71 trillion in June. Credit card debt fell 5 percent to $865 billion. That's only 1.6 percent above the post-recession low reached in April 2011. Americans have been relying less on credit cards since the 2008 financial crisis and Great Recession. At the same time, student loan debt has steadily increased. It has risen 54 percent since mid-2008 to total $902 billion as of March this year, according to the Federal Reserve Bank of New York. Student loans now accounts for roughly 35 percent of all consumer debt, up from less than a quarter four years ago. That makes it the biggest source of consumer debt outside of mortgages. The increase partly reflects high unemployment, which has led many Americans to seek better education and skills in a more competitive labor market. "We are probably witnessing a shift in consumers' attitudes towards debt," said Paul Edelstein, an economist at IHS Global Insight. "Households may be willing to take on debt to pay for cars and education... . But other forms of consumption will come increasingly from current incomes." Overall, Americans have been steadily paring debt since the financial crisis. Household debt, including mortgages and home equity lines of credit, has declined for 16 straight quarters to $12.9 trillion in March, according to the Fed. That's down from $13.8 trillion in March 2008.
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