Consumer borrowing, overall debt both up in January

WASHINGTON -- Americans increased their borrowing in January by the largest amount in eight months, the Federal Reserve reported Friday.

New debt rung up by consumers increased at a seasonally adjusted annual rate of 8.6 percent in January, or by $14.3 billion, from the previous month. That marked the largest increase since May and pushed total consumer credit outstanding to a record $2 trillion in January.

January's borrowing pace marked a pickup from December, when consumer borrowing rose at a 5 percent rate.

Demand for revolving credit, such as credit cards, rose at a 8.6 percent pace in January. That was up from a 1.4 percent growth rate in December and represented the fastest pace November 2001.

For nonrevolving credit, which includes loans for new cars, vacations and education, demand rose at an 8.5 percent rate in January, compared with a 7.1 percent growth rate in December.

Consumers have been increasing their debt loads even as the labor market has struggled to recover.

The Fed's report includes credit card debt and loans for boats and mobile homes. It does not include real-estate loans, such as home mortgages, or increasingly popular home-equity loans.

Federal Reserve chairman Alan Greenspan said in a speech last month that American households' finances generally are in good shape even though consumers have built mountains of debt and bankruptcy filings have surged.

Superlow interest rates and extra cash from refinancing have given people flexibility to manage their debt better, the Fed chief said.