Americans Added $2.93 Billion to Credit Bill in April

Americans took out $2.93 billion more in credit than they paid off in April, the biggest increase in six months, the government said Friday.

The Federal Reserve said the strong gain followed a revised $322-million increase in consumer credit in March. The March figure had originally been reported as a $63-million decline, which would have been the first drop in consumer credit in five years.

Even with the upward revision for March and the April gain, consumer debt is still growing at a much slower pace than in 1986. Analysts said this was consistent with their belief that consumers have begun cutting back on spending in the face of high debt burdens and sluggish personal income growth.

Small Retail Gains

Retail sales were up only 0.1% in April, and David Wyss, senior economist at Data Resources Inc., said retail sales figures for May, scheduled to be released next week, would likely show further sluggishness.

The April rise in credit, the largest gain since a $5.59-billion increase last October, came primarily from a big gain in the category that includes credit card debt, which rose to $1.43 billion after a decline of $496 million in March.

Wyss said this suggested slower growth in home equity loans. These loans have been heavily promoted by financial institutions as a way for consumers to consolidate their credit card debt by taking out a home equity loan.

Home equity loans and other types of mortgages secured by real estate, which still qualify for federal tax deductions on the interest charges, are not covered in the Fed report on consumer credit.

In addition to the rise in credit card debt, auto loans climbed $896 million in April following a rise of $226 million in March.

The category that includes cash loans from banks not secured by real estate rose $602 million in April following a gain of $768 million in March.

The various changes left consumer credit at $582.84 billion in April, equal to a 6.1% annual rate.