Consumer credit jumped by $2 billion in February, the largest monthly rise for 12 months, the Federal Reserve reported yesterday.

Last year's credit controls and credit squeeze led to several months of sharp declines in outstanding credit in the early summer. However, installment credit generally has expanded since then as the economy has grown.

Yesterday's report showed that $28.7 billion worth of installment credit was extended in February, a rise of 6.1 percent, while $26.7 billion worth of installment loans was paid off, up just 2 percent from the previous month.

In January the total amount of outstanding credit increased by $869 million after seasonal adjustment, the Fed said. After peaking at the turn of the year, interest rates have declined slightly in recent weeks, and this could have encouraged people to borrow.

In addition, the auto rebate programs during February helped to generate $8.3 billion in new auto credit business, up by $1 billion, or 15 percent, from the previous month. Auto loans are a major part of consumer credit, and when new-car sales trailed earlier, this braked the rise in outstanding credit.

Bank lending for auto purchases shrank by $346 billion during February as repayments outstripped new loans, the Fed reported. But overall auto credit outstanding grew during the month by a seasonally adjusted $979 million after dropping in January by $63 million.

Sharp increases in gasoline prices during February pushed up the credit card business of gasoline companies by $154 million, the Fed report showed.

Revolving credit outstanding rose an adjusted $441 million in the month, after a rise of $557 million in January. Mobile-home debt slipped by $47 million, following a $24 million decline in January.

At the end of February, consumer installment credit outstanding totaled $309.19 billion, down 0.3 percent from a year earlier.

The sharp falls in consumer credit between April and July last year left a rise of only 1 percent for the year compared with 14 percent growth in 1979. Currently, installment credit is rising at an 8 percent annual rate.