Americans may not be charging as much as they used to, but that does not mean they are not shopping. (David Paul Morris/Bloomberg)

Americans are taking advantage of greater credit availability without a heavy reliance on plastic, a trend economists say bodes well for a healthy recovery in consumer credit.

The Federal Reserve reported Wednesday that consumer borrowing, excluding mortgages, surged ahead by $13.8 billion to $2.8 trillion in June, a 5.9 percent annual rate increase. Non-
revolving credit, the category for student loans and auto financing, shot up $16.5 billion for the month, offsetting a $2.7 billion decline in credit card spending.

The Fed does not provide precise numbers for auto or education financing, but it said student loans issued by the federal government climbed $3.3 billion in June. That means car loans probably were responsible for most of the midyear gains.

It is a notable shift in consumer behavior.

“People buy cars when they feel better about their job prospects,” said Dean Baker, co-director of the Center for Economic and Policy Research. “It’s one of the better signs for the economy.”

Americans delayed replacing their aging vehicles during the recession, but they have reversed course. Auto sales are booming, with consumers purchasing cars and trucks at an annualized rate of 15.6 million in July and 15.9 million in June, the strongest pace since late 2007, according to Ward’s Automotive Group.

Lenders have loosened credit standards, and interest rates have remained at historic lows — the average interest rate on a 48-month new car loan, according to, is hovering around 2.6 percent.

Even though consumers are willing to take out new car loans, they appear reluctant to take on high-interest-rate credit card debt. Credit card debt has tumbled 16.5 percent from its July 2008 peak, although use of plastic has picked up this year, according to the Fed.

People may not be charging as much as they used to, but that does not mean they are not shopping. Americans increased their spending in June by $59.4 billion, or about 0.5 percent, the fastest pace in four months, according to the Commerce Department.

“What we’re seeing is indicative of a healthy, well-functioning credit market,” said Ezra Becker, vice president of research and consulting at TransUnion, a credit bureau.

Wage stagnation and higher payroll taxes may be making Americans skittish about running up their credit cards. Researchers at the Commerce Department say incomes inched up 0.3 percent in June, after rising a mere 0.4 percent in May.

“Ultimately, it will take a rise in wages to fuel consumer spending and borrowing and an economic recovery as a whole,” said Amy Traub, a senior policy analyst at Demos, a public policy organization.

Analysts say more credit card borrowing could boost consumer spending, which accounts for 70 percent of the economy, and may be needed to improve lackluster economic growth.

But economists say the contraction in credit card borrowing in June should not raise any alarms. The decline follows a $6.4 billion increase in credit card borrowing in May. In fact, overall borrowing in May jumped 7.5 percent from the prior month, the largest increase of the year.

“When you average out the borrowing in May and June, you’re looking at around 3 percent [growth] a month, which means consumer credit is growing at a reasonable pace,” Baker said.