Consumer borrowing surges in September

U.S. consumer borrowing unexpectedly increased in September by the most in two years, led by a surge in nonrevolving credit such as college loans and auto financing.

Credit rose $2.1 billion after falling a revised $4.9 billion in August, the Federal Reserve said Friday. Economists projected a $3-billion decrease.

Credit card debt declined for the 25th straight month, while nonrevolving loans rose by the most since August 2007.

Cheaper borrowing costs may be encouraging Americans to purchase big-ticket items such as new cars. Spending accounts for about 70 percent of the U.S. economy.

"This bodes well for the future," Chris Rupkey, chief financial analyst at Bank of Tokyo-Mitsubishi UFJ Ltd. in Manhattan, said ahead of the report's release. "Consumers are increasingly confident that the economic recovery will continue."

Nonrevolving debt jumped $10.4 billion in September. Federal government nonrevolving loans, such as those for student loans, increased an unadjusted $27 billion in September.

Revolving debt, which includes credit cards, dropped $8.3 billion in September, the most since December 2009, according to the Fed.

In a sign that Americans are reducing debt and building savings, past-due credit card payments declined in the second quarter to the lowest level since 2001.

Card delinquencies fell to 3.62 percent from 3.88 percent, according to figures last month from the American Bankers Association in Washington.

- Bloomberg News