March retreat as spending slows

From Tribune news services
Published May 6, 2006

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 increased by $2.5 billion in March, or at an annual rate of just 1.4 percent, to $2.161 trillion.

That was down from a 2.5 percent pace in February and represented the smallest increase since November, when borrowing decreased.

The moderation in March was led by a reduction 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.

"Many credit cards are tied to the prime rate, which has gone up 200 basis points the past year," said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. A basis point is .01 percent.

Demand for non-revolving credit, which includes loans for cars, vacation and education, rose at an annual rate of 2.4 percent in March. That was down from a 3.9 percent growth rate in February.

Source: Chicago Tribune

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