WASHINGTON – The Federal Reserve has said that while total consumer borrowing increased by $7.4 billion, much of that increase can be attributed to auto and student loans instead of high-interest credit card debt.
The increase in borrowing comes on the heels of a 16 month decrease as reported by the Fed in August. Credit card use has continually declined since September of 2008, and it has now sunk 19% since the highest point in the financial crisis. Most consumers have proven unwilling to take on high interest debt with continued employment problems and few pay increases.
While credit card interest rates continue to climb, with the average variable interest rate sitting at 14.46 percent, the rates for auto loans average just 5.31 percent while student loan rates are currently at 4.5%.
Earlier in the year, economists were concerned the economy might slip back into recession, but with a growth rate between July and September of 2.5 percent, those fears have now eased considerably.