Stats from the Federal Reserve and the American Banker’s Association spell good news for the economy.
The Fed’s latest numbers show the biggest jump in credit utilization seen since May 2012. While growth of student debt and auto loans held steady, use of revolving credit increased by $6.6 billion—a 9.3% annualized gain—between April and May 2013. That means people are charging more and carrying balances on credit cards.
May’s jump in revolving credit utilization is just one sign that consumers are getting over their recession-era wariness of taking on debt.
The American Banker’s Association (ABA) also came out with data last week showing a drop in credit card payment delinquencies. The delinquency rate (people more than 30 days behind on credit card payments) was at its lowest since 1990, at 2.41%.
Post-economic crash, the delinquency rate reached a high point of 5%, leading to credit issuers writing off bad debts and becoming very selective about how much new credit they issued and to whom.
More credit could raises interest
Even though credit is more widely available and people are pulling out their plastic with less hesitation, there are still concerns that interest rates may start to climb. Economic analysts predict that credit card interest rates, which have mostly stayed flat, could begin to follow mortgages and student loans on an upward trajectory.
More good news from the Conference Board and jobs sectors
In other optimistic economic news, the July unemployment report reflected 195,000 new jobs added in June. The Conference Board also came out with their Consumer Confidence index for June. The index rose from 73.4 in May to 81.4 in June and reflected an increasing number of consumers who believe that there are even more jobs are on the horizon.