increasing card spending, which could cause further concern about credit quality. To some industry experts, the widening gap between available credit and actual loan balances is a sign that consumers are acting prudently. Others say the sizable credit lines will come back to haunt lenders when the economy turns sour. Bank card credit lines topped $2 trillion at the end of the third quarter, up 4.8% from midyear, according to Veribanc Inc. of Wakefield, Mass., a bank rating company. Card loans outstanding stood at only $459.3 billion. "In a world of plenty, is using less of a fraction of what is available being prudent? I don't think the answer is obvious," said Veribanc's research director, Warren Heller. Veribanc, which puts out quarterly reports on data from bank regulatory filings, said card lines have been growing steadily for eight years. The biggest spike occurred in the first quarter of 1997, when available credit jumped 9.8% in just three months to $1.5 trillion. In this year's third quarter consumers used $1 per $9.32 of available card credit, versus $1 per $6.76 in the first quarter of 1997. "Many lenders believe they can rein in the limits by monitoring individuals' card behavior," Mr. Heller said. "But if someone decides to run up a high bill after a job loss, can the issuer catch it? I suppose we won't find out until the next economic downturn." Another report, from the Credit Research Center at Georgetown University and Trans Union Corp., shows that all consumer credit lines grew 104% between 1992 and midyear 1998, when they averaged $19,400. Borrowers were using $5,200, or 26.8%, of that. Gregory Elliehausen, editor of Monthly Statements, a newsletter that Credit Research Center and Trans Union are jointly publishing, said he believes his research confirms that consumers are using card credit wisely and that banks are lending safely. "If there were a great relaxation in credit standards, I would have expected delinquency rates to have increased much faster," he said. Delinquency rates are down slightly from record highs. In its report for the third quarter of 1998, the American Bankers Association said its composite delinquency index-the percentage of various types of closed-end loans at least 30 days past due-was 2.29%, down from 2.35% in the second quarter. The credit card delinquency rate was flat at 3.28%, but that is down from a 3.72% peak in the fourth quarter of 1996. Edward Bankole, an analyst for Moody's Investors Service, said most of the credit is going to creditworthy, middle-income borrowers. He said this segment makes up half of all new credit card accounts opened, many of which are at 9.9% interest rates. The growth in credit lines is a reflection of the type of borrowers who are being targeted by card issuers, he said. "My concern is that in a period of economic downturn, the middle-income sector may rely on borrowing to sustain their lifestyle even when their income declines," Mr. Bankole said. "If that happens, bankruptcies may rise again."

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