Consumer Credit

Consumers boosted their borrowing in May, mostly reflecting heavy credit card use. The Federal Reserve reported that consumer credit increased at an annual rate of 3.6% in May, roughly the same pace as logged in the prior month. The pickup pushed total consumer debt up by $7.8 billion to $2.57 trillion. That was a bit more brisk than the $7 billion over-the-month increase economists had been expecting.

For seven years, a bill collector enabled by the powerful Experian credit reporting bureau pursued Maria Pintos over a $3,000 towing bill. "They used to call me at work and threaten to ruin my good credit," Pintos, 71, said of Pacific Creditors agents who hounded her at her San Mateo County mental health department job for months after the May 2002 towing. "It was so embarrassing, because there were patients around who could hear." On Thursday, the 71-year-old Pacifica, Calif.

New federal protections for credit card users go into force today, but in advance of the tougher rules, banks have been raising fees and interest rates -- hoping to ensure that one of their historically most lucrative businesses remains that way. Since Congress approved the landmark credit card overhaul legislation last spring, many issuers of plastic have jacked up interest rates, switched accounts from fixed to variable rates, and raised annual...

Sen. Christopher J. Dodd (D-Conn.), who has won praise from consumer groups for taking on credit card providers over predatory lending practices, has collected thousands of dollars in donations from people affiliated with the so-called payday loan industry. The lawmaker raised more than $44,000 from pawnshop owners and other businesses that provide high-interest loans, often to people with bad credit ratings, according to campaign finance reports. The amount, a fraction of the $1.

Consumer borrowing rose again in November as credit card debt shot up by the largest amount in six months. The Federal Reserve reported Tuesday that consumer borrowing climbed at an annual rate of 7.4% in November, far higher than the 1% rise in October. The category that includes credit card debt surged at an annual rate of 11.3%, a six-month high, an indication that shoppers were relying heavily on credit cards to finance purchases since home equity lines of credit became harder to get.

Easy credit is great. Except when it's too easy. Millions of people are now in danger of losing their homes as a result of the meltdown in the sub-prime mortgage market. But millions more face the prospect of financial ruin because of an even more ubiquitous problem: the danger of making only minimum payments on monthly credit card bills. Michelle Schimeck, 35, discovered this for herself after running up a combined balance of more than $20,000 on five credit cards.

Students at Corinthian Colleges and other for-profit learning institutions are getting a painful lesson in credit-crunch economics: Some lenders, including giant Sallie Mae, are turning off the money faucets for less credit-worthy applicants. That means students at these commercial schools who use high-rate private loans to bridge gaps in their tuition costs or who fail to qualify for conventional loans and grants may have a harder time financing their educations.

More Americans have fallen behind on consumer loans than at any time in nearly 16 years as credit problems once concentrated in mortgages spread into other forms of debt. In a quarterly study, the American Bankers Assn. said the percentage of loans at least 30 days past due rose to 2.65% in the fourth quarter from 2.44% in the third quarter and from 2.23% a year earlier. The rate of delinquencies was the highest since a 2.75% rate in the first quarter of 1992.

Alan Greenspan says don't blame him for the U.S. housing bubble, the sub-prime meltdown and the resulting credit crisis. The real culprits are professional investors, the former Federal Reserve chairman wrote in an article published Sunday in Britain's Financial Times newspaper. Some critics have asserted that the easy U.S. monetary policy during the last several years of Greenspan's Fed tenure was responsible for the rapid rising in U.S. housing prices.

I just love it when the credit card industry threatens to take its toys and go home. That, in effect, was what card issuers said in response to the announcement by federal regulators last week that they planned to crack down on some of the industry's more consumer-unfriendly practices.