Magazine article American Banker

Revolving Credit Jumped by Record $5 Billion in April

Magazine article American Banker

Revolving Credit Jumped by Record $5 Billion in April

Article excerpt

Credit card issuers have to be smiling about their good fortune in April.

Revolving credit rose by $5 billion in the month, after edging up $1.4 billion in March, the Federal Reserve Board reported Tuesday.

Overall, consumers borrowed $8.9 billion in installment loans in April, the Federal Reserve said - the largest one-month hike in nearly a decade.

The seasonally adjusted monthly change in credit outstanding stood at a revised $8.4 billion in March, up from the $7.4 billion the Fed originally estimated.

Revolving credit accounted for about half of the overall increase, the report said.

Installment loans include credit card debt, automobile loans, and other personal loans. Economists have been encouraged by the consumer installment numbers that have risen for 11 consecutive months, but the sharp rise in credit card use had some puzzled.

Consumers are spending beyond their incomes, said James Annable, chief economist for First Chicago Corp., which suggests that savings have gone down. "You have to scratch your head and ask how are people doing that?"

A few months earlier, he said, consumers used money from refinanced mortgages to make new purchases. Now they are looking for new credit lines, including home equity loans and credit cards. "That means this is in reality a short-lived phenomenon."

The installment credit boon can also be associated with the huge increase in homebuying at the beginning of this year. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.