Consumers borrow more, but not on their credit cards

Consumer credit use continued to expand in February despite the amount of credit card debt held nationwide falling once again, marking the second straight month in which it has done so.

It seems that experts' assertions that upticks in consumer credit card use seen at the end of last year were the result of seasonal spending increases proved accurate, as the amount of credit card debt carried by Americans slipped for the second consecutive month in February, according to the latest monthly consumer credit statistics released by the Federal Reserve Board. Prior to the end of last year, revolving credit, the type most commonly associated with credit card debt, had risen for a number of months, but fell 3.3 percent in February even after dipping 4.4 percent in January. The most recent decline saw consumer credit card debt drop to $798.6 billion, down from $800.8 billion in January and $803.8 billion at the end of last year.

Experts had noted that consumers were making more significant efforts to reduce their outstanding credit card debt over the last few years, and that the upticks seen at the end of last year were the result of borrowers using their cards more to finance gift purchases during the holiday shopping season. Typically, these numbers fall after the new year, and have done so appreciably this time around, indicating that consumers are also being far more conscientious about getting their debt back under control after tapping those accounts for what they saw as necessary items. Revolving credit has been falling for quite a while, though experts also note that it's likely borrowing will bottom out at some point, meaning that consumers will have to start borrowing more again. That will likely come as more continue to feel better about the recovering economy and their own financial situation.

Meanwhile, interest rates on credit cards slipped only slightly somewhat from the end of last year, the report said. APRs on all credit card accounts fell to 12.34 percent in February, down slightly from the 12.36 percent seen at the end of 2011, but up from the 12.28 percent at the end of the third quarter that year. Meanwhile, APRs on accounts that were assessed interest charges rose to 13.04 percent, up from 12.78 percent at the end of last year, and more in line with the third quarter of 2011's 13.08 percent.

Other borrowing increases

However, even as consumers continued their successful efforts to decrease credit card debt, nonrevolving credit, which includes installment loans like those for auto purchases, student loans and the like, increased 7.7 percent to a total of more than $1.72 trillion, the report said.

Consumers who want to ensure they get the best possible interest rates on any line of credit they seek should first check their credit reports before applying. This may help them identify any potentially unfair markings that can have an adverse effect on their scores.