Consumer Borrowing Up in November

Jan 10th, 2011 @ 5:59 PM by Debbie Dragon

According to a report by the Federal Reserve released last week, during the month of November consumer credit rose for the second month in a row, up 0.7% from October. Leading the way was a jump in non-revolving credit, which rose by $5.6 billion to $1.61 trillion, mainly in the form of student loans. Another area that jumped was auto financing.

Revolving credit was actually down 6.3% during the month of November, which includes mainly credit card debt. In October revolving credit debt totaled $800.7 billion and fell to $796.5 billion in November.

Revolving credit has actually been dropping since the beginning of the recession, so it is not really a surprise to see it down again during the month of November. It dropped every quarter during 2010 and is expected to continue in that direction. Since third quarter of 2009, revolving credit has dropped almost $100 billion. Revolving credit debt during November actually saw its smallest drop compared to recent months, which is most likely due to consumers purchasing items for the holiday season.

Also down during the month of November was credit card bill defaults. Credit card bills that were 30 days overdue took another drop of 4.38%. This is the lowest amount seen in almost three years. All of the top six credit card issuers in the US have reported that they saw lower delinquencies during the month including Bank of America and JP Morgan Chase. Additionally, credit card write offs fell at four of the six banks with only JP Morgan and Capital One reporting an increase.

Looking ahead to 2011 credit card health is expected to continue to improve and consumer spending should gradually continue to rise. Credit card issuers could see a rise in overall credit card receivables during the year for the first time since the recession began.