Consumer credit rose by $5.08 billion in May, marking the eighth straight monthly increase, as credit card debt had its largest gain in three years, according to the Federal Reserve's monthly G.19 report.
Revolving credit, 98% of which is credit card debt, soared by $3.36 billion after declining by $876.7 million in April. It marks the biggest increase in credit card debt for any month since mid-2008.
The figures suggest a willingness to keep borrowing despite a tight job market and unstable economy. It's possible the rise is occurring as consumers facing limited job prospects turn to credit cards more often to pay bills.
Non-revolving credit, which includes categories such as student loans and auto loans, expanded by $1.7 billion in May after shooting up by $6.54 billion in April.
The total of all consumer credit outstanding in May reached $2.432 trillion, up from a total of $2.427 trillion in April.
At least one analyst warns against reading too much into the latest revolving-credit data, due to its cyclical nature.
“Data from a single month does not translate to a trend, and there are several other reasons to be cautious about overinterpreting the May revolving-credit data,” Scott Hoyt, senior director of consumer economics for Moody’s Analytics, a division of Moody’s Investors Service, tells PaymentsSource, a Collections & Credit Risk sister publication.
One factor that could have contributed to the May uptick in credit card borrowing was a spike in gasoline prices that occurred during the same month, Hoyt says.
“Because gas is largely purchased on plastic, and particularly with credit cards, the gas-price spike may have contributed to higher credit spending that may be paid off before it turns into revolving debt,” he says.