Consumer borrowing increased by the largest amount in more than three years in July, led by a gain in non-revolving credit that includes student loans.

Credit rose $12 billion after a revised $11.3 billion jump in June, according to the Federal Reserve's G.19 report released Thursday. The gain was the biggest since April 2008 and the tenth consecutive monthly increase, the Fed’s figures showed. 

Revolving credit, 98% which includes credit card debt, showed the biggest drop in six months, down $3.4 billion to $792.5 billion. The decline follows two straight monthly increases and may be a sign that consumers are cutting back on buying non-essential items as limited job and wage growth depresses consumer confidence. The Fed's report doesn’t track debt secured by real estate, such as home equity lines of credit and home mortgages.

Non-revolving debt, including educational loans and loans for autos and mobile homes, rose by $15.4 billion in July to $1.7 trillion, the largest monthly increase since November 2001.

The total rise in credit reflected a $15.6 billion non-seasonally adjusted rise, to $385.7 billion, in the federal government category of borrowing, which includes school loans. The unadjusted figures also showed smaller increases in non-revolving borrowing at commercial banks, finance companies and credit unions, which may reflect a pickup in car sales during the month.

Americans picked up the pace of car buying in July. Vehicle sales climbed to a 12.2 million annual rate during the month from an 11.41 million pace, according to industry data.

Consumer spending has slowed sharply this year, amid a 9.1% unemployment rate and only soft gains in workers' earnings. The latest report by the Commerce Department on retail sales showed those rose in July less than forecast. Economic growth hasn't met the Fed's expectations and central bank officials have said they would keep interest rates at very low levels into 2013.

For many consumers debt burdens remain high even though the recession ended more than two years ago.

In a speech earlier Thursday, Fed Chairman Ben Bernanke said households seem exceptionally cautious. "Readings on consumer confidence have fallen substantially in recent months as people have become more pessimistic about both economic conditions and their own financial prospects," Bernanke said.

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