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Rising consumer borrowing could boost credit card sales

10/02/2012 - By Frank LoSchiavo

Consumer credit borrowing rates are much higher than experts anticipated, which mean retailers might be processing more credit cards in the coming year.

Tag: Credit Card Processing

The demand for credit increased by 9 percent in December to reach $19.3 billion. The Federal Reserve released a consumer report showing that consumers are borrowing credit at much higher rates than expected. Rates nearly tripled what experts predicted for the month and some analysts are interpreting these staggering numbers as a sign of economic recovery.

Consumers "are willing to take on this debt because there is some increasing degree of confidence in the economy," Ken Mayland, president of ClearView Economics LLC, told Bloomberg News. "Consumers over the past several years have done a pretty good job of repairing their balance sheets."

Non-revolving credit, which includes loans for education and cars, increased by $16.6 billion in December. Revolving credit, which accounts for credit cards, grew by $2.76 billion. Total consumer borrowing has now reached $2.5 trillion, an amount comparable to pre-recession levels.

As consumers bolster their credit for spending, retailers should get ready for an increase in credit card processing. To prepare, they can outfit stores with new debit and credit card machines that complete transactions and authenticate sales quickly. Businesses that accept credit cards online might benefit from updating online offerings to incorporate social and mobile retail trends. 

Articles written by ChargeNational.com's editorial team. For more information, click here.

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