WASHINGTON — Americans took out more student and auto loans in September to boost consumer borrowing to a record level. But they cut back on credit card borrowing, a sign many remain cautious about taking on high-interest debt.
Total consumer borrowing rose $11.4 billion in September compared with August, the Federal Reserve said Wednesday. Total consumer debt outstanding, which excludes mortgages and other housing-related borrowing, stands at $2.74 trillion – the highest level on record.
The increase was driven entirely by a category that consists mostly of student and auto loans. Borrowing in that category increased $14.3 billion. Credit card borrowing fell $2.9 billion, the third drop in four months.
Most of the gains appeared to be in student lending, which could reflect the start of the academic year. Loans held by the federal government, which are mostly student loans, increased $13.8 billion. The figures for specific categories of loans are not seasonally adjusted.
Much of the increase in student loans is a reflection of high unemployment, which has led many to go back to school. The unemployment rate was 7.9 percent in October, well above the roughly 6 percent rate many economists equate with healthy job markets.
Overall, Americans’ finances have been improving. Low interest rates are also helping. The percentage of after-tax incomes that Americans are using to pay interest on all debt, including mortgages, fell to 10.7 percent in the second quarter. That’s down from 14 percent at the end of 2007, when the recession began.