More consumers are keeping up with payments on their credit cards and other loans. But that is coming at a cost: They are cutting back sharply on borrowing as they pare back debt. While that is good for the long-term financial health of households, the development could slow spending and the overall economic recovery.
Consumer borrowing declined at a 5.6% annual rate in February to $2.45 trillion, the Federal Reserve said Wednesday. Consumer borrowing, which includes most loans outside of real estate, had increased 2.1% in January, reflecting how borrowers typically slow payments after running up card balances over the December holidays. Revolving credit, largely credit-card borrowing, declined at a 13.1% annual pace in February. Nonrevolving credit—including loans for cars, boats and education—fell at a 1.6% annual rate that month. Analysts attributed part of the February decline to winter storms that kept consumers at home.
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