Consumers appear to be returning to credit cards, with consumer credit rising for an eighth straight month through May as a result of credit card use.
Following the 2008 credit crisis, consumers drastically reduced their use of credit cards, ConsumerAffairs.com reports, by data from the Fed shows that credit rose in May by $5.08 billion following a revised $5.67 billion gain in April. The May increase was more than $1 higher than the consensus projections.
Consumers are not, however, using their cards for luxury purchases like expensive vacations or home electronic goods, such as televisions. Instead, credit cards are increasingly being used for gasoline purchases. As gasoline costs continued to rise for the last year, the purchase of gasoline can be seen as being responsible for part of the rise in consumer credits.
Some economists also believe that credit cards are being use for purchasing day-to-day needs such as groceries, ConsumerAffairs.com reports.
According to the Fed, revolving debt, which includes credit cards, rose by $3.37 in May following an $877 million decrease in April. The May increase marks the first gain in revolving debt in 2011 and the biggest gain since June 2008.
Non-revolving debt, which includes auto financing and auto loans, rose by $1.71 billion in May follow a $6.54 billion jump in April, according to ConsumerAffairs.com.