U.S. consumer borrowing rises to record $2.75T
WASHINGTON (AP) - Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high.
The Federal Reserve said Friday that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion.
Borrowing in the category that covers autos and student loans increased by $10.8 billion. Borrowing on credit cards rose by $3.4 billion, only the second monthly increase in the past five months.
The strong rise in borrowing came in a month when Americans cut back on consumer spending, reflecting in part disruptions from Superstorm Sandy.
Many consumers may also have scaled back because of fears about the "fiscal cliff." That's the name for automatic tax increases and spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal by then.
Consumer spending drives roughly 70 percent of economic activity.
Economists think that it could bounce back in November. But the underlying trend remains weak because with unemployment remaining high, households don't have the incomes to spend.
Many consumers have been reluctant to build up credit card debt, which typically carries steeper interest rates than other loans.
Credit card usage has fallen sharply since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In October, that figure was 17 percent lower.
During the same period, student loan debt has increased dramatically. The category that includes auto and student loans is 22 percent higher than in July 2008. That reflects in part the fact that many Americans who have lost jobs decided to go back to school to get training for new careers.
The Federal Reserve said Friday that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion.
Borrowing in the category that covers autos and student loans increased by $10.8 billion. Borrowing on credit cards rose by $3.4 billion, only the second monthly increase in the past five months.
The strong rise in borrowing came in a month when Americans cut back on consumer spending, reflecting in part disruptions from Superstorm Sandy.
Many consumers may also have scaled back because of fears about the "fiscal cliff." That's the name for automatic tax increases and spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal by then.
Consumer spending drives roughly 70 percent of economic activity.
Economists think that it could bounce back in November. But the underlying trend remains weak because with unemployment remaining high, households don't have the incomes to spend.
Many consumers have been reluctant to build up credit card debt, which typically carries steeper interest rates than other loans.
Credit card usage has fallen sharply since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In October, that figure was 17 percent lower.
During the same period, student loan debt has increased dramatically. The category that includes auto and student loans is 22 percent higher than in July 2008. That reflects in part the fact that many Americans who have lost jobs decided to go back to school to get training for new careers.
Banks understand that money must continuously circulate through the economy to sustain civil society. Borrowing money allows employers to keep wages low because they know the banks will make up the difference with credit, and the government will make up their part with food stamps. So stop borrowing money.
Sad to see so many people relying on credit any more. Haven't had a credit card in 30 years, pay cash for everything. People don't seem to understand that this also creates big problems for our currency. For every $10 you borrow the banks basically print $90 of fake money to invest with. That leads to depreciation of the value of a dollar. So everyone that complains about inflation, ask them if they have any credit. If they do then they're part of the problem.
 @Blindman Proof of what you wrote, please.
trouble, people borrowing more than they should, hope the BANKS are not making to easy for those people the money if so I urge you to just go bankrupt on those BANKS.
Not to worry. Obama will take care of all of us. He said he would. That must be why he is asking for more "power" from Congress such as complete autonomy over this nation's debt ceiling. Hmmm. This for a guy that has never held a real job, you know a job like you and I.
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It serves all those voters right. They or their young adult family will never be able to retire. They have created a cradle to the grave working class to support the giveaways and the government.
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The dumbing down of America. Instead of drama and arts classes in our schools, we should be teaching finance - at least "why" a savings account and an IRA is needed.
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@sentryone if you borrow the money its U R problem not Obamas. For the debt ceiling it is money that the gov, has already spent, I take it you are a FOX political station viewer
I use my credit cards as my primary means of payment for all but a few groceries. I also pay the bill in total every month. I haven't had any interest on a credit card for over a decade.
Have we learned absolutely nothing?
Unbelievable.
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$0 CC debt here and our Christmas gifts will be few but paid for. That is worth so much.Â
Keep swiping, soon you can all say goodbye to your multi-SUV households LOL
 @Larry*X*K You have multiple SUV's? You must be rich?
Can't blame the banks and brokerage houses for this.
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Head over to a credit card payment website and run some minimum payment scenarios for $15K-$30K credit card balances. If you're in your 40's and carrying a cc balance like that, you're looking at a pretty sad and uncomfortable retirement.
@wysoumible did you read the story? Credit card debt is down 17% since its peak in 2008. The increase is being driven by student loan debt, the new bubble. But of course in order to get a job you need a degree but college tuition costs is growing faster than even medical. Think those in their 40's are going to have a sad retirement? Try those who are 15. Further debt load doesn't matter if the interest is low and you can pay it off. I use 0% no payment financing all the time. I can write the check anytime, but roll it until the 0% is ready to end and pay it all off. Credit has its place with RESPONSIBLE use.
@Howard Beale The myth of the decade is that you need a "degree". No, you do not. There are a number of skilled and unskilled jobs available for those who are will to start at the bottom and work their way up.  Over the years i took the job that was available and did not fool myself that i could walk in to a senior position. I made myself valuable to the company. I sat at my desk, or stood at my table. i took my breaks and lunch without fudging the minutes. I did not take pens from my employer. When my work was done, i helped someone else or dusted the shelves.  2 of my kids do not have degrees; found entry level jobs and a work ethic and are gainfully employed.  And last i heard the military was still hiring, does not require a degree and will help with education expenses.