Consumer Credit Climbs to $18 billion in August

by San Antonio Attorney

In August, people in America increased their borrowing, which is the highest amount within the past three months with largest gains in the category of student loans, car loans and credit card debt.

The total increase of consumer borrowing from July to August was more than $18 billion, according to the Federal Reserve. Borrowing in July fell for the first time in almost 12 months.

The jump in August, together with another report that the U.S. unemployment rate went down to 7.8 percent last month, was seen as reassuring indications for the economy.

The gains of August borrowing showed a $13.9 billion increase in student and auto loans and a $4.2 billion borrowing increase on credit cards.

IHS Global Insight senior economist Gregory Daco said some consumers with stable finances are using more credit to purchase retail goods and autos, Daco said.

In August, the retail sales increased partly because consumers purchased more trucks and cars. But they were prudent elsewhere due to the soaring gas prices.

People have been using much less credit cards since the credit crisis in 2008. That time, the American credit card debt was $1.03 trillion, the highest of all time. But the figure was 17 percent lower in August.

The student loan debt soared in the same period. The category of student and auto loans has increased by 20.3 percent compared in July 2008.

The increase of student loans is mostly due to high unemployment, causing many people to go back to school hoping to improve their skills and education in a more cut-throat labor market.

Although the federal quarterly report includes all household debt, its monthly consumer credit report only includes loans not guaranteed by real estate property, leaving out home equity loans and mortgage loans.

 

- Nowadays, many people are facing a drop in income. Fortunately, bankruptcy can make debt repayments affordable. Talk to a San Antonio Chapter 13 Attorney if you want to stop foreclosure or repay your debts over time.

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