Consumer borrowing continued to rise in April on the back of non-revolving credit, such as auto and student loans, the Federal Reserve recently reported.
Economists attribute the 5.3 percent year-over-year rise in non-revolving debt to the rising demand in auto purchases during the period. However, Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ, recently told Bloomberg that the rising gas prices in May cut into these loans.
While non-revolving debt surged during the period, borrowing on revolving accounts – credit cards – fell.
"The consumer is still leery about running up charge-card balances after the greatest financial crisis since the Great Depression," Rupkey told the news source.
In addition to consumers being worried about racking up more credit card debt, another reason revolving credit fell during the 12-month period may be because a number of individuals have poor credit scores that make them ineligible for affordable interest rates.
In order to boost their scores, some consumers are working with credit attorneys to identify troublesome or problematic items that do not belong on their credit reports. These may include inaccurately reported account details or marks that were not reported in compliance with federal mandates. Removing these blemishes may often result in an increase in the consumer's credit score.