Credit Cards Showing Signs of a Rebound

U.S. consumers are becoming less wary of the credit card than they were in the wake of the Great Recession.

Last week the Federal Reserve Board announced that revolving consumer credit jumped in April by $8.8 billion, the largest one-month jump since late 2007. And on Wednesday, top executives from card issuers Capital One Financial (COF) and Discover Financial Services (DFS) said they're seeing a rebound in consumers' appetite for plastic.

Speaking at a conference in New York hosted by Morgan Stanley, Capital One's chief financial officer, Stephen Crawford, said there's a chance that an anticipated return to loan growth in the company's credit card portfolio will happen prior to July — or earlier than Capital One had expected.

Meanwhile, Discover Chief Executive David Nelms said that credit-card spending has picked up since the winter, when snow and cold temperatures in much of the country kept shoppers away from the stores.

Spending on credit cards began rising in March, according to Nelms. "I think that's continued. I'm seeing a little better consumer confidence numbers," he said at the Morgan Stanley conference.

The upbeat comments from card industry executives were supported by data released Wednesday by First Data Corp., which found that credit-card spending rose by 4.9% in May, as compared with a year earlier.

The spike in spending on credit cards was stronger than the growth involving debit cards and prepaid cards, according to First Data, which collects data from nearly four million merchant locations.

"A number of factors, including normalized weather, pent-up demand, falling unemployment and rising home prices supported consumers' willingness to spend in May," Krish Mantripragada, a senior vice president at First Data, said in a news release.

Specifically with respect to credit cards, he attributed the growth in spending last month to easing lending standards, payroll growth and a surge in spending at certain categories of merchants where credit cards are the primary payment device.

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