Credit card debt rises for first time in two years

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Americans boosted their credit card balances in December for the first time in more than two years, a shift that may help explain the strength in holiday spending.

Total credit card debt outstanding on Dec. 31 was a seasonally adjusted $800.5 billion, an increase of $2.3 billion from a month earlier, or 3.5% at an annualized rate, the Federal Reserve said in a report Monday.

That was the first increase since August 2008 -- which was just before the financial system meltdown.

Card balances had been shrinking since the credit crisis as some consumers voluntarily paid down debts and as others had their credit yanked by retrenching banks.

Credit card debt is down 18% since August 2008, when it totaled $974 billion.

The upturn in card debt could be another sign that consumers are growing more confident about the economy, or at least about their personal job security. Consumer spending helped lift the economy in the fourth quarter to its strongest pace of growth since the first quarter of last year.

Rising card use also could reflect that some cash-strapped Americans are using plastic to make ends meet, or that people are launching businesses by borrowing on their cards.

Consumer debt other than credit cards also rose in December, Fed data show. That total, which includes auto loans, student loans and other personal loans -- but excludes mortgage debt -- rose to a seasonally adjusted $1.61 trillion, up $3.8 billion from November, an annualized rate of increase of 2.8%.

Non-card consumer debt rose 1.7% in 2010 even as card debt fell 7.5%, the Fed said.

-- Tom Petruno

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