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Consumer borrowing down for first time in 10 years |
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Thursday, 09 October 2008 |
SCBIZ Daily Staff
CHARLESTON -- Consumer borrowing dropped in August for the first time in 10 years.
Total consumer credit was $2.577 trillion in August, down from $2.585 trillion in July, the Federal Reserve reported Tuesday. Consumer borrowing fell at an annual rate of 3.7% in August, the Fed said, in the first decline since January 1998.
Much of the decline was seen in non-revolving credit, such as car loans and credit for other big-ticket items excluding real estate. Borrowing on revolving credit, which includes credit cards, decreased slightly as well.
Creditors have become stricter in their lending practices, but more people have found themselves in poor financial standing, as well, said David Geer, executive director of Family Services Inc., a credit counseling agency in North Charleston.
“It probably means there are a lot more people in a difficult credit position and can’t get more credit anyway,” he said.
Geer said his business has increased substantially this year. In past years, he would counsel about 200 people a month. Now, he sees about 250 people with unmanageable debt from credit cards, mortgages and payday loans.
“What we see are individuals coming in far greater numbers that haven’t been able to manage their debt structure,” Geer said.
The Fed cut a key interest rate this morning with the hope that consumers and businesses would spend more freely.
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