The amount of money consumers borrowed in the month of October rose across all loan types to highs not seen in two years.
According to the Federal Reserve Board, Americans borrowed 3.7 percent more in October, many of which showed a significant interest in obtaining installment loans such as those for automobile purchases and funding education. In all, the total amount of money borrowed on this type of credit climbed to a national total of nearly $1.67 trillion, up 5.3 percent from September’s nearly $1.66 trillion. This type of credit is referred to as nonrevolving because it can’t be subtracted or added from one month to the next.
During the month of October, consumers also increased the amount of money they borrowed on their revolving credit accounts, which is typically associated with credit cards. Credit card debt grew by $300 million (0.6 percent) to a total of $792.3 billion, which is still well below the total seen at the end of last year.
according to Bloomberg Businessweek, there is a bit of uncertainty as to what this increased consumer credit use means.
“It’s hard to determine whether spending on credit is a sign of optimism or a sign of distress, but just anecdotally we feel there is the beginning of tentative feelings of comfort in taking on slightly more debt,” Dana Saporta, a U.S. economist at Credit Suisse in New York, told the news service.
In general, a number of recent polls have found that consumers are feeling better about their financial standing these days and, as a consequence, may simply believe themselves to be in a better position to pay back the money borrowed from lenders.
Of course, some consumers are still struggling with the financial hardships brought on by conditions during the economic downturn, and as such may be looking for more relief before seeking new lines of credit or to increase borrowing on existing ones. In these instances, it may be a good idea to seek the help of a certified and reputable credit counseling agency, which can connect consumers with financial professionals who will be able to walk them through their various options for getting out of debt.