WASHINGTON — Americans increased their borrowing in March at the slowest pace in four months as people cut back on their credit card charges.
The Federal Reserve reported Friday that consumer borrowing rose at an annual rate of just 1.4 percent in March. That was down from a 2.5 percent pace in February and represented the smallest increase since November when consumers actually sliced their borrowing.
That moderation in March was led by a cutback in borrowing on credit cards.
Use of revolving credit, primarily credit cards, dipped at a 0.2 percent pace in March, following a tiny 0.1 percent growth rate in February.
"The recent trend is for consumers to tap their credit cards more judiciously," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "They may be responding to rising borrowing costs and also in some cases they may be trying to keep their spending within their means."
The Federal Reserve's two-year-long rate-raising campaign has left commercial banks' prime lending rate, used for many consumer loans, at a five-year high of 7.75 percent.
Demand for nonrevolving credit, which includes loans for cars, vacation and education, went up at an annual rate of 2.4 percent in March. That was down from a 3.9 percent growth rate in February.
The slower growth in overall consumer credit comes as rising prices for gasoline and other energy products are straining the budgets of some families, economists said.
Consumers who were stretched by rising energy bills may have chosen to restrict their debt burdens, Reaser said.
The Fed's report does not include debt from home mortgages, home-equity loans or other loans secured by real estate.
On the Net: Federal Reserve: http://www.federalreserve.gov/Source: Chron.com - Houston Chronicle
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