Consumer credit helped by low rates
Sept. 11, 2013 – Total consumer installment credit grew an annualized 4.4 percent in July as consumers continued to take advantage of low vehicle- and education-loan interest rates, according to NAFCU Senior Economist Curt Long.
However, the July increase is down from June’s 5.1 percent increase and May’s 6.8 percent increase. “Non-revolving credit increased in July as consumers took advantage of low interest rates to purchase vehicles and as young adults pursued higher education,” Long said in a NAFCU Macro Data Flash report. “Revolving credit continued to have negative growth as consumers paid down credit card accounts.”
Non-revolving credit, which is primarily made up of motor vehicle and education loans, increased at an annual rate of 7.4 percent, while revolving credit, which is primarily credit cards, decreased 2.6 percent in July.
“Non-revolving credit is expected to continue to drive consumer credit growth as vehicle sales improve and as students pursue higher education in response to limited employment opportunities in the weak labor market,” Long said.
Credit unions’ share of total consumer installment credit was 9.1 percent in July. Total consumer installment credit was up 1.2 percent in July for credit unions; 0.3 percent for banks; and 0.2 percent for financial companies. In the second quarter, total consumer credit rose 2.5 percent for credit unions; 1.7 percent for banks; and 0.5 percent for financial companies.
NAFCU Macro Data Flash report