Consumer credit surges on student and auto loans

Americans have recently shown signs of becoming more interested in dealing with debt after eschewing it during the recession, and that trend continued in December 2011.

The total amount of debt carried by consumers rose 9.3 percent in December, increasing nearly $19 billion, according to the latest monthly statistics from the Federal Reserve Board. The surge was largely driven by a significant increase in nonrevolving debt, meaning consumer installment loans such as those to finance education or car purchases, but excluding mortgages. This type of debt jumped 11.8 percent to a nationwide total of nearly $1.7 trillion.

Meanwhile, revolving credit, made up almost entirely of credit card debt, rose 4.1 percent in December, the report said. The nationwide total of credit card balances climbed to more than $800 billion for the first time since the end of the fourth quarter in 2010.

When taking on any type of debt, consumers need to have the best possible credit score to ensure the lowest interest rates available. Checking their credit report and making sure no errant markings are reducing their rating unfairly is key to this process.