Consumer borrowing in the US saw an uptick in February, driven notably by a substantial increase in credit card balances, marking the largest rise in three months.
According to data released by the Federal Reserve on Friday, total credit increased by $14.1 billion, following a revised gain of $17.7 billion in January. Economists surveyed by Bloomberg had predicted a $15 billion increase.
Revolving credit, which includes credit cards, experienced a significant increase of $11.3 billion in February. Non-revolving credit, which covers loans for items such as vehicle purchases and school tuition, rose by $2.9 billion.
These figures are not adjusted for inflation.
Despite robust job growth continuing to drive household spending, there are concerns about the rising balances on credit cards.
With these accounts often carrying higher interest rates, consumers' monthly payments could start to consume a larger portion of their paychecks, potentially putting these borrowers at risk if the economy or labor market weakens.
The Federal Reserve's report also highlighted that the average interest rate for credit cards that charge interest is now 22.63%, up from under 17% before the onset of the pandemic.
Total credit expanded at a 3.4% annual rate in February, slightly down from the 4.2% growth seen in the previous month.
It's important to note that the Fed's report does not include debt secured by real estate, such as home mortgages.