U.S. consumer borrowing rises more than expected on credit card use

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(Bloomberg) – U.S. consumer borrowing rose more than expected in August, with credit card balances rising the most in five months.

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Total credit rose $32.2 billion from the previous month, Federal Reserve figures showed on Friday. The median forecast from a Bloomberg survey of economists called for a $25 billion advance. Figures are not adjusted for inflation.

Revolving credit outstanding, which includes credit cards, increased by $17.2 billion. This is the third largest monthly increase ever recorded. Non-revolving credit, which includes auto and school loans, rose $15.1 billion.

Consumer prices are rising across the economy, and while wages are also rising, the rapid pace of inflation is testing Americans’ ability to afford both basic necessities and discretionary purchases. Many are dipping into their savings or relying on credit cards to keep up.

The Fed report showed the impact of recent Fed interest rate hikes. The commercial bank rate on credit card packages rose from 15.13% in the second quarter to 16.27% in August. For a five-year loan on a new car, the rate was 5.5%, down from 4.85%.

Separate data on the distribution of household wealth released last month by the Fed showed consumer debt, including credit cards, hit an all-time high for the 118 million U.S. households among the bottom 90% poorer.

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