Tuesday, February 8, 2011

Consumers Borrow in December

U.S. consumer credit card debt increased in December after declining for more than two years. I wouldn’t take this one-month reversal as an indication of a new trend, though. We know that consumer spending in December is different from other months of the year. Also, there isn’t much else to support the idea that consumers have changed their minds about credit. However, there are indications that banks are becoming slightly less reluctant to lend to consumers, approving more credit cards, sometimes with higher credit limits. It remains to be seen whether that is a one-time adjustment in underwriting standards or will lead to further easing from banks.