Consumers Relying On Credit Cards And Pushing Them Into Debt
It looks like consumers were depending on their credit cards to buy all their Christmas gifts – which they may regret in a few months. November records show that consumers took on so much debt causing credit card balances to be raised at an unusual high pace.
Total seasonally adjusted consumer debt increased by $15.5 billion, or a 7.5% annual rate, in November to $2.51 trillion after a revised 1% rise in October, the Fed reported. It was the biggest gain in outstanding debt since August. Credit-card debt rose by $8.7 billion, or 11.3%, in November to $937 billion after an 8.6% gain in October. It was the biggest increase since May and the fourth-largest gain in credit-card debt since the expansion began in November 2001.
Some economists say consumers are using their credit cards more because they can’t tap their home equity as easily as they could a year or two ago. Non-revolving credit - such as auto loans, personal loans and student loans - increased by $6.7 billion, or 5.2%, to $1.57 trillion after a 3.5% drop in October. The consumer credit figures do not include debts backed by real estate, such as mortgages or home-equity loans.