Consumers Put Away Credit Cards in April, But Still Rack Up Debt

U.S. consumers used their credit cards less than in any month since May 2005, yet still managed to exceed analysts’ expectations for consumer credit expansion, the Federal Reserve reported late Friday.

In its monthly report on consumer credit – called G.19 by economists – the Fed said that consumers added just $300 million to credit card balances in April, an annual increase of 0.4 percent. It’s the smallest monthly increase for credit card debt since May 2005 when credit card debt contracted 1.8 percent. In March, consumers spent $5.9 billion on credit cards, and monthly card spending has averaged $6.9 billion so far this year.

But overall, consumer credit expanded by $8.9 billion in April, or at a 4.2 percent annual rate. Analysts polled by Reuters and Bloomberg had anticipated credit expansion of around $7.5 billion in April. The Fed’s G.19 report does not cover real estate loans.

Since consumers shunned credit cards – called revolving debt in the report – in April, nearly all of the gain was in non-revolving debt, which includes auto and boat loans, student loans, and other fixed-payment loans.

Non-revolving debt increased $8.7 billion in April, or 6.5 percent annualized. It is the quickest grow in the non-revolving category since August 2007. For the first quarter of 2008, non-revolving debt increased at a 4.1 percent annual rate.

Total consumer credit outstanding in the U.S. was $2.564 trillion at the end of April.