Consumer credit rose 3% in March, declined at CUs

WASHINGTON (5/9/11)--U.S. consumers borrowed more than expected in March--with credit totaling $2.46 trillion, the Federal Reserve said Friday. That was 3% or $6 billion more than in February. Credit unions lent $219.7 billion during the month--about $2.2 billion less than in February. While credit card debt stayed the same as in February for credit unions, their March nonrevolving loans slipped $2.2 billion.

March's overall consumer credit outstanding was the sixth consecutive month that borrowing had increased, following February's increase of $7.6 billion, said the Fed. Economists surveyed by Dow Jones Newswires had estimated a $4.8 billion gain in consumer credit (The Wall Street Journal May 6).

Overall revolving credit card debt and nonrevolving loans such as auto, student and mobile home loans each increased 3% during March, said the Fed. Overall credit card debt totaled $796.1 billion, compared with $794.2 billion in February. March marked the second time in 31 months that credit card debt increased, signaling that American consumers may be letting their credit debt grow again (The Atlantic May 6).

Analysts offered several possible explanations for the increase in credit card debt. One possible explanation is related to rising gas and food prices forcing some consumers to run a credit card balance to make ends meet, said The Atlantic. Or it could be that consumers are eager to spend again. According to Bloomberg.com, gains in payroll may be giving consumers the ability to borrow more, and consumers are more confident about the economic outlook and their financial situation.

For credit unions, credit card debt remained at $35.3 billion, same as in February, but $6 million less than in January, said the Fed's report. Credit unions lent $184.5 billion in revolving loans, compared with $186.7 billion in February and $188.2 billion in January, the report said.

Overall nonrevolving credit totaled $1.629 trillion, nearly $4.1 billion more than in February. In credit unions, nonrevolving loans totaled $184.5 billion, compared with $186.7 billion in February and $188.2 billion in January.

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