Credit card debt spikes to six-month high
Total consumer borrowing shoots up to 7.4 percent in November as buyers rely on credit cards in the face of housing market collapse.
January 8 2008: 3:40 PM EST
WASHINGTON (AP) -- Consumer borrowing rebounded in November as credit card debt shot up by the largest amount in six months.
The Federal Reserve reported Tuesday that consumer borrowing rose at an annual rate of 7.4 percent in November, far higher than the 1 percent rise in October.
The category that includes credit card debt surged at an annual rate of 11.3 percent, a six-month high, reflecting the fact that shoppers are continuing to rely heavily on their credit cards to finance purchases since home equity lines of credit have become harder to get.
The category that includes auto loans also increased in November, rising at a rate of 5.1 percent after having fallen by 3.5 percent in October.
The 7.4 percent overall increase in credit pushed total credit up by $15.4 billion - much stronger than the $8.5 billion increase that analysts had been expecting.
The 11.3 percent rise in credit card debt was the seventh straight month of strong gains in this area and was the biggest jump since a 12.8 percent rise in May.
Economists believe that consumers are being forced to rely more heavily on borrowing on their credit cards with the collapse of the housing market, which has depressed home prices and prompted banks to tighten up on lending standards for mortgages and home equity lines of credit.
The five-year housing boom had prompted a lot of homeowners to refinance their mortgages and take out home equity lines of credit to take advantage of the surging values of their homes - a boom that is being reversed in many parts of the country by the current housing slump.
The overall increase left total consumer credit at a record $2.51 trillion. The Fed's credit report tracks all debt not secured by real estate meaning that mortgages, a big chunk of the debt load carried by most households, is not covered.