Consumer Borrowing Off Sharply in December

Americans let their credit cards cool off in December and cut back on borrowing by the largest amount in 11 years.

The retrenchment came after a record increase in personal debt in November as zero-interest-rate financing offers spurred a big rise in auto loans.

The Federal Reserve reported Thursday that consumer credit fell by a seasonally adjusted $5.1 billion in December, or at a 3.7% annual rate.

The dollar decrease was the biggest since December 1990, when borrowing fell by $5.8 billion. The percentage decrease matched the rate of decline registered in October 1991.

The pullback in December reflected a big drop in demand for revolving credit, such as that used for credit cards. Demand for revolving credit fell by a record $8.2 billion, or at an annual rate of 14.2% in December. That compared with an increase of $5.5 billion and a growth rate of 9.7% in November.

The Fed said the dollar decrease in revolving credit was the biggest since it began keeping records in 1943. The rate of decline was the steepest since a 15.7% rate in January 1978.

Demand for nonrevolving credit, including new cars and vacations, rose by $3.1 billion in December, or at an annual rate of 3.9%. That followed a whopping $14.6-billion increase, or a 18.5% growth rate, in November.

In November, total consumer borrowing rose by a record $20.1 billion, or at a 14.8% rate.

Worries about job security and a volatile stock market played a role in getting consumers to trim their overall credit use in December.