A dip in credit card debt helped to restrain a rise in overall consumer borrowing in February, according to data released last week by the Federal Reserve. Specifically, credit grew by $8.7 billion - the smallest gain in four months - after a revised $18.6 billion surge in January. The figure was considerably less than the $12 billion rise predicted by economists in a Bloomberg survey. "Credit card borrowing has slowed down a bit," Aneta Markowska, a senior U.S. economist at Societe Generale in New York, told Bloomberg. "Clearly there was a run up in the past few months related to the holidays, and we've seen a pretty meaningful slowdown. The process of repairing consumers' balance sheets still has farther to go." The increase in borrowing was driven by an $11 billion rise in the category measuring demand for auto and student loans, while borrowing on credit cards dropped by $2 billion after a $3 billion decline in January. Increased borrowing by consumers is sometimes difficult to interpret. On the one hand, it may mean Americans are more willing to incur debt - an implication of improved confidence in the economy and employment prospects. However, it may also mean consumers are forgetting the lessons of the recession and returning to the frivolous spending trends of the pre-recession economy. But with recent gains in the job market, the former scenario seems more realistic. Trends in credit cards debt, however, suggest frugality may be the sign of the times. The Associated Press reports that consumers carried $799 billion in credit card debt in February - 15 percent less than they held in December 2007, which is cited as the first month of the economic downturn. Meanwhile, student loan debt recently surpassed the $1 trillion mark for the first time at the end of last year. "Other analysts said Americans might be opting to use cash instead of credit cards as a way to continue paying down their debt," reports Derek Kravitz for the AP. "Consumer spending rose in February by the most in seven months. Most consumers spent more of what they earned." Either way, debt collection
agencies are likely to enjoy the recent surge in borrowing trends, as more organizations demand professional services to recover their dues.