New reports from the Fed shows U.S. consumer borrowing increased by $5.01 billion for a fourth straight month in January from a $4.09 billion gain in December, although it was mostly in non- revolving loans. With this, economists are projecting a $3.5 billion increase in the measure of credit card debt and non-revolving loans. This is a clear indication of consumer confidence in their financial situations in conjunction with the dwindling unemployment rate.
But credit card loans and delinquency rates are still falling, having decreased $4.25 billion in January, thanks in great part to remaining strict lending standards, but also to fiscal prudence on the consumer’s behalf. Charge-offs on credit cards declined for the fifth consecutive month to 7.45% in January, according to the Moody’s Credit Card Index. This compares to Fitch findings showing chargeoffs for January marked the fourth straight month-over-month improvement, down 62 basis points to 8.37%, down 18% since the year ago period to a two-year low.
The new CARD Act amendments also dropped card interest rate increases and late fees, helping both future industry and consumer performance.
