Total consumer installment credit increased at an annualized rate of 4.4 percent in July, as shoppers continued to take advantage of low interest rates on student and auto loans.
The July increase, however, is down from the 5.1 percent increase in June and 6.8 percent increase in May.
“Non-revolving credit increased in July as consumers took advantage of low interest rates to purchase vehicles and as young adults pursued higher education,” Curt Long, a senior economist at the National Association of Federal Credit Unions, said in a recent report. “Revolving credit continued to have negative growth as consumers paid down credit card accounts.”
Non-revolving credit, which is primarily comprised by auto and education loans, grew at an annual rate of 7.4 percent. Revolving credit—primarily credit cards—meanwhile, fell by 2.6 percent in July.
“Non-revolving credit is expected to continue to drive consumer credit growth as vehicle sales improve and as students pursue higher education in response to limited employment opportunities in the weak labor market,” Long said.
Credit unions’ total share of consumer installment credit was 9.1 percent in July. The CU sector saw total consumer installment credit increase by 1.2 percent, while banks saw it increase by 0.3 percent and financial companies saw an increase of 0.2 percent.
During the second quarter, total consumer credit increased 2.5 percent for credit unions, 1.7 percent for banks and 0.5 percent for other financial institutions.