Consumer Credit Growth Slows in Sept; Credit Cards Lead the Way

Consumer credit in the U.S. expanded at a tepid rate in September, according to numbers released by the Federal Reserve late Wednesday. Credit card spending, however, remained strong.

Total consumer credit expanded by $3.75 billion in September, or at an annual rate of 1.8 percent, the lowest rate since April of this year. The total was about half of what analysts’ had been expecting, with MarketWatch predicting $7.5 billion and Reuters analysts predicting $8.5 billion. The Fed’s monthly numbers exclude real estate loans.

Much of the increase was due to revolving credit, which includes credit cards. Revolving credit increased by $3.4 billion in September, or at an annual rate of 4.4 percent, accounting for most of the overall credit expansion. Credit card debt expanded by an upwardly-revised $7.1 billion in August. The Fed originally reported last month that revolving debt increased by $6.1 billion in August.

The seemingly small increase in credit card debt was still a strong showing, according to one economist. "The rise in credit card debt was not like the gains we had been seeing, but it was still sizable," said Mark Zandi, chief economist at Economy.com told the Associated Press. "With the housing market evaporating and housing values falling, consumers have no choice but to turn back to their credit cards as a source of cash."

Non-revolving credit was the real loser in September, according to the Fed. Debt such as auto and boat loans grew only $400 million in the month, a 0.3 percent annual rate. It was the lowest reading for non-revolving debt since October of last year. In August, non-revolving debt expanded by a revised 6.4 percent.

Total consumer debt outstanding in the U.S., excluding home and property loans, now stands at $2.482 trillion, with $920.1 billion in revolving debt and $1.56 trillion in non-revolving debt.