American consumers borrowed money to buy cars in September, but they continued to tighten their belts and cut up their credit cards throughout the third quarter, according to the most recent credit data from the Federal Reserve.
Consumer credit increased 1.1% in September but declined 1.4% at an annual rate in the third quarter, the Federal Reserve reported Friday. Consumer credit outstanding fell 2.5% in August and 2.7% in July.
For only the second time in the last 20 months, consumer credit showed a monthly increase, up $2.1 billion in September, according to a Nasdaq news report. But the increase came from auto loans.
“September's gain is due solely to a $10.4 billion rise in non-revolving credit, a component boosted by strong auto sales,” the Nasdaq report said. “Strong unit sales of autos reported earlier this week point to another rise for this component in the October report. Non-revolving credit, reflecting the move away from credit cards, contracted $8.3 billion during September.”
Read about the potential impact on advisors of the newly formed Consumer Financial Protection Bureau at AdvisorOne.com.