U.S. consumers - fortified by the government's rebate checks - boosted their borrowing in June at the fastest pace in seven months.How exactly are they supposed to pay ths back at the incredibly high interest rates charged on credit cards? The answer is they are not. They will just continue to pay interest to these credit card companies and never get ahead. The death of the American Middle class is almost complete.
The Federal Reserve reported Thursday that consumer credit increased at a brisk annual rate of 6.7% in June. That was up from a 3.8% growth rate in May. It marked the biggest increase since November when consumer borrowing grew at a 8.2% pace.
Debt rung up by consumers rose by $14 billion in June from the previous month to a total of $2.59 trillion. That was more than the $6.4 billion over-the-month increase economists were forecasting.
Demand for non-revolving credit used to finance cars, vacations, education and other things, went up at a rate of 6.6% in June, marking a sizable pickup from May's sluggish 1.5% pace.
Meanwhile, consumers' appetite for revolving credit, which is primarily credit cards, increased at a rate of 6.8% in June, a moderation from a 7.6% growth rate logged in May. Consumers have been forced to charge more of their purchases on credit cards as banks have tightened lending standards on other types of loans.
Thursday, August 07, 2008
Consumer Debt Soars
The Middle Class is now the working poor with a credit line.