U.S. Consumer Borrowing Rises to Record $2.75 Trillion

credit loans car dealershipMARTIN CRUTSINGER, AP Economics Writer

WASHINGTON (AP) - Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high.

The Federal Reserve said Friday that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion.

Borrowing in the category that covers autos and student loans increased by $10.8 billion. Borrowing on credit cards rose by $3.4 billion, only the second monthly increase in the past five months.

The strong rise in borrowing came in a month when American cut back on consumer spending, reflecting in part disruptions from Superstorm Sandy.

Many consumers may also have scaled back because of fears about the "fiscal cliff." That's the name for automatic tax increases and spending cuts that will take effect in January if Congress and the Obama administration fail to strike a budget deal by then.

Consumer spending drives roughly 70 percent of economic activity.

Economists think that it could bounce back in November. But the underlying trend remains weak because with unemployment remaining high, households don't have the incomes to spend.

Many consumers have been reluctant to build up credit card debt, which typically carries steeper interest rates than other loans.

Credit card usage has fallen sharply since the 2008 credit crisis. Four years ago, Americans had $1.03 trillion in credit card debt, an all-time high. In October, that figure was 17 percent lower.

During the same period, student loan debt has increased dramatically. The category that includes auto and student loans is 22 percent higher than in July 2008. That reflects in part the fact that many Americans who have lost jobs decided to go back to school to get training for new careers.

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This amount is horrifying and will probably never be paid back to the lenders in full. I paid off any credit cards with a balance in 2005. Then we closed them all. We have only used cash since. What a relief for us and for our children. Does everyone know that your children will be responsible for any debt you leave upon your death? I would never want to do that so we have NO debt at all. It makes life so simple and easy. And because we don't shop for a bunch of stuff we do not need, we have saved incredibly. Try it.

December 11 2012 at 3:59 PM Report abuse +2 rate up rate down Reply

People are getting way over confident in the economy

December 11 2012 at 12:41 PM Report abuse +2 rate up rate down Reply

I'm sure it has more to do with Christmas than the economy. We always charge this time of year.

December 11 2012 at 12:13 PM Report abuse +2 rate up rate down Reply

Yeah baby, spend it like you stole it!! And don't worry about paying it back, Obama will crash the economy anyways so all those dollars you owe will be like worthless monopoly money in a year or two anyways.

December 11 2012 at 11:21 AM Report abuse +2 rate up rate down Reply
1 reply to majbjb's comment

from the mouth of a rep/tbag! get over yourself.

December 11 2012 at 4:01 PM Report abuse rate up rate down Reply
1 reply to gammy's comment

Get over yourself darling. How unfortunate for you that you had to post such a low class remark. Although as you know we liberals a famous for our low class uneducated remarks dear.

December 11 2012 at 5:07 PM Report abuse rate up rate down

It's a sign of the (Obsama) times.

December 11 2012 at 10:07 AM Report abuse +1 rate up rate down Reply

Everyone probably thinks that they won't have to pay this off because of 21DEC. OR they figure, what the hell, spend it and let someone else worry about paying it off. Sounds like the trickle down theory. The ideas of government trickling down to the people.

December 10 2012 at 10:34 PM Report abuse +4 rate up rate down Reply

The sad part is that well over half the auto loans are sub-prime loans and we all know how that panned out. I suspect that the repo man is going to be very busy after the first of the new year.

December 10 2012 at 10:33 PM Report abuse +5 rate up rate down Reply

Here we go again! The house of cards is getting higher and higher!

December 10 2012 at 7:45 PM Report abuse +7 rate up rate down Reply

Bad sign, people are not spending, but charging what they do buy. Wonder why? Because they do not have the money to begin with. Deja vu. Will we ever learn?

December 10 2012 at 4:46 PM Report abuse +4 rate up rate down Reply
1 reply to donut999's comment

How do people who have no $$, had several bankruptcies continue to get credit?? People should only be allowed one per lifetime. Then debtors prison,

December 11 2012 at 4:06 PM Report abuse rate up rate down Reply

Why worry about paying it back ... the Obamacrats will find a way to "help" you ...... Why be responsible when there is always someone willing to lend a helping hand with someone elses money

Make a dollar .. spend a dollar ...... this worked in the past ... I guess no one has to follow this golden rule anymore

December 10 2012 at 10:07 AM Report abuse +4 rate up rate down Reply
1 reply to rgmac12's comment

Particulary when we bailed out the big banks and gave the executives their million dollar bonuses.

December 11 2012 at 6:45 AM Report abuse +1 rate up rate down Reply