updated 9/8/2008 6:24:15 PM ET 2008-09-08T22:24:15

Borrowing by U.S. consumers slipped in July to the weakest pace in seven months, reflecting a big slowdown in demand for car loans.

Major Market Indices

The Federal Reserve reported Monday that consumer borrowing grew at an annual rate of just 2.1 percent in July, the slowest pace since a 1.9 percent rise last December.

The slowdown reflects a tiny 0.5 percent rate of growth in the category that includes auto loans, down from a 6.1 percent surge in this category in June. Automakers reported that demand for cars fell in July to the lowest level in 16 years.

The category that includes credit cards grew at an annual rate of 4.8 percent in July, up from a growth rate of 3.5 percent in June.

The 2.1 percent growth rate for total credit represented an increase of $4.5 billion, far smaller than the $8.8 billion increase that economists had been expecting and down from a gain of $10.96 billion in June.

Consumers this year have been forced to charge more of their purchases to credit cards as banks have tightened lending standards. That has curtailed use by consumers of home equity loans to finance their spending.

The concern is that all types of consumer spending will slow dramatically in coming months as the boost from $106.7 billion in economic stimulus payments wears off.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 2.79%
$30K home equity loan FICO 5.78%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.57%
13.57%
Cash Back Cards 17.91%
17.91%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com