Consumer borrowing up sharply

[lovuian]

http://www.usatoday.com/money/economy/2007-10-05-consumer-credit_N.htm

WASHINGTON — Consumers have boosted their borrowing at the fastest pace in three months, turning increasingly to their credit cards to replace home equity loans as a source of ready cash.

The Federal Reserve reported that consumer credit rose at an annual rate of 5.9% in August, the biggest increase since a 7.9% jump in May.

The increase was led by an 8.1% leap in revolving credit, the category that includes credit card loans. Consumers have been using their credit cards more to finance purchases now that home equity lines of credit are becoming harder to obtain.

Non-revolving credit, which includes auto loans, also rose at a faster pace in August, increasing at an annual rate of 4.7%, compared with gains of 3.1% in July and 4% in June.

In total, consumer credit rose by $12.2 billion to a record $2.469 trillion. The increase was bigger than the $9.5 billion gain analysts had been expecting.
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Using your home as a piggy bank is coming to an end

[Debi]

1. What happens when these folks can't pay the credit card bills

or the car payments? :scared:

Living on credit is scary when there's no $$ to pay it off :shrug:

[halobeam]

2. thanks for posting this

Glad to see the "home as a piggy bank" is dying out. It will save some from losing the roof over their heads.

As the first poster noted though, increasing credit card debt does give a frightening view of another type of fall-out.

[blonndee]

3. Scary.

I predict this won't last long, either, as CC companies won't wait long to start collections.

I can only imagine how many people are paying bills and buying necessities with credit cards. I know I have had to use my CC to pay moving expenses and other new-home costs. I'm a new teacher and my paycheck has been WAY lower than I expected, so I'm among that group. I hope I can stop putting groceries on my credit card soon. I'm so terrified that I won't be able to afford my mortgage that everything else has been temporarily put on the CC until I get the new budget figured out.

[NC_Nurse]

4. Maybe they're using the cards to pay the mortgage.

Yikes...

[Viva_La_Revolution]

5. More than likely.

This is not a good sign. :(

[catmandu57]

6. Maybe living on credit is so ingrained

by now that people can't let it go they're addicted, they've been prodded down the chute to the slaughter and there isn't any turning back now. They can't refinance but they've got a fist full of plastic money, for now.