The Federal Reserve said today (Tuesday) that the pace of borrowing by U.S. consumers fell in February. Consumer credit decreased by $7.48 billion, or 3.5 percent at an annual rate, to $2.56 trillion. Credit increased by $8.14 billion in January, more than previously estimated. The Fed’s report doesn’t cover borrowing secured by real estate.
Demand for credit shrank further in March as unemployment climbed and banks remained reluctant to extend affordable loans.
“Consumers know they have to cut back on debt,” said Christopher Low, chief economist at FTN Financial in New York. “But it’s hard to change old habits, so we go through these periodic binges of credit, as we did in January, and then we go through a couple of months of paying down our balances.”
Revolving debt such as credit cards decreased by $7.79 billion. Non-revolving debt, including auto loans and mobile home loans, rose by $313.5 million. [via Bloomberg]