Though consumers have been eschewing the use of their credit cards for most of the last year or more, the amount of debt carried on those accounts increased significantly in the month of March.
The amount of revolving credit, which is most commonly associated with credit card debt held nationwide, soared to its highest levels in more than a year in March as consumers returned to using their accounts to fund purchases they otherwise could not afford, according to the latest monthly statistics issued by the Federal Reserve Board. In all, revolving credit increased 7.8 percent during the month, marking the first increase since the start of the new year.
Currently, revolving credit stands at a total of $803.6 billion, up from February's total of $798.5 billion, the report said. This was the second consecutive quarter in which consumer credit card debt held above $800 billion, as it did in the fourth quarter of last year after being well below that mark in the first three quarters of 2011.
Meanwhile, credit card interest rates were a bit of a mixed bag, the report said. The interest rates on all accounts fell marginally, to an average of 12.34 percent from the 12.36 percent seen at the end of last year. However, on accounts that were assessed interest charges, rates spiked to 13.04 percent from the 12.78 percent at the end of 2011, indicating that consumers who carried a balance from one month to the next are now paying more for doing so, in general, than they were just three months ago.
Student loan borrowing increases as well
And even as consumer credit card use increased significantly, the amount of nonrevolving credit, which includes all consumer installment loans except mortgages but is largely made up of education and automobile financing, rose as well, the report said. In all, these totals jumped 11.3 percent, up from an 8.1 percent increase in February. Nonrevolving debts now total nearly $1.74 trillion, an increase from February's slightly more than $1.72 trillion.
In all, consumer credit rose 10.2 percent, an increase of more than $21 billion, between February and March, the report said. That was the largest such increase seen in either percentage or actual dollars in more than a decade. In particular, the federal government issued close to $7 billion in new loans over the course of the month, rising to a total of $460.2 billion, from $453.3 billion in February.
When consumers are borrowing for any type of credit card or other loan, it is important that they check their credit reports to better know where they stand, as low credit scores generally get less favorable loan terms. Checking their credit reports can potentially help them identify any unfair markings that are having a negative effect on their rating, and working with a credit repair company can help to clear up these issues.