Consumer Debt Jumps Sharply [View All]

[NVMojo]

The increase suggests that Americans are relying more on credit cards as gasoline costs rise, economists say.
From Bloomberg News
August 8, 2006

Consumer borrowing unexpectedly accelerated in June as Americans used credit cards to finance more of their purchases, a Federal Reserve report showed Monday.

Consumer credit, or non-mortgage loans to individuals, rose $10.3 billion to $2.19 trillion, following a revised $5.89-billion increase in May. The two-month gain was the biggest since September-October 2004.

Americans are relying more on credit card debt because rising interest rates and a cooling housing market make it harder for them to take out home-equity loans. Higher prices at filling stations are also prompting consumers to borrow more, economists said.

"The jump in consumer credit coming at a time when consumers are hard hit by soaring gasoline costs could indicate some financial woes on the part of borrowers," said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. "It looks as if consumers are relying more on credit cards now that other avenues of credit such as mortgage refinancing have been shut off to them."

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http://www.latimes.com/business/investing/la-fi-credit8aug08,1,1217902.story?coll=la-headlines-business-invest