Consumers Continue to Tighten Purse Strings, Reveals Fed Report
Borrowing among U.S. consumers fell for the fourth straight month in May, dipping by 4.5 percent, according to the Federal Reserve.
Borrowing among U.S. consumers fell for the fourth straight month in May, dipping by 4.5 percent, according to the Federal Reserve.
The biggest decline was seen in the revolving credit category, which mainly consists of credit card debt. From April to May, the category fell at an annual rate of 10.5 percent. Since March, the category has dropped by $15.7 billion.
Borrowing in the nonrevolving credit category, composed mostly of auto loans, fell for the second month in a row in May, this time at an annual rate of 1.4 percent, or $1.8 billion. Since March, nonrevolving credit has fallen by $18.3 billion.
Interest rates on new-vehicle loans remained stable at 4.13 percent in May, but are still below the first quarter average of 4.31 percent.
Loan terms mirrored the first quarter average, increasing slightly from 62.6 months in April to 62.9 months in May.
The loan-to-value ratio on new-car loans reached 87 percent in May, a slight decrease from the 88 percent recorded in April and below the first quarter average of 89 percent.
Amount financed increased to $27,886 in May, up $89 from the $27,797 recorded in April. The increase snaps the four-month decline in this segment, but is still below the first-quarter average of $28,444.
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