Growth in U.S. consumer installment credit accelerated more than expected during January on greater demand for credit card, auto and other personal loans, the Federal Reserve reported in Washington.

Non-mortgage borrowing rose $11.5 billion, or 6.6 percent at an annual rate, the biggest increase since October, to $2.1 trillion, the Fed said. In December, such debt increased by $8.7 billion, more than first estimated.

Consumer spending, which accounts for two-thirds of the U.S. economy, picked up even after the Fed raised rates to 2.25 percent in December from 1 percent in June to stem inflation. The U.S. central bank raised rates another quarter point last month.

``Consumers are accelerating their borrowing,'' said Robert Allsbrook, chief economist at AmSouth Bank. ``They are convinced rates will be higher later in the year.''

The median forecast for the January report on consumer credit was an increase of $5.3 billion, according to a Bloomberg News survey of economists. The Fed's previous estimate for December was an increase of $3.1 billion.

Treasury notes traded near a one-week high as inflation concerns receded following a government report March 4 showing wage slowed in February even as the economy added 262,000, the most since October. The yield on the 4 percent note due February 2015 held at 4.31 percent at 4:03 p.m. in New York.

``The outlook for consumer spending continues to brighten, and the big jobs report Friday can only help to make consumers more confident in the future,'' said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York. ``Consumer spending will continue to support this economic expansion going forward.''

Credit Cards

Revolving credit, which includes credit cards, rose by $5.4 billion in January after rising by $5.6 billion in December.

With the economy growing at the fastest pace in five years, many card issuers are prospering. MasterCard Inc., the world's second-biggest credit-card brand, had 2004 net income of $238.1 million after a $385.8 million loss a year earlier that included expenses to settle lawsuits.

MasterCard revenue climbed 15 percent to $2.59 billion as the volume of transactions processed through its network grew 11 percent to $1.455 trillion, the Purchase, New York-based company reported in a March 2 Securities and Exchange Commission filing.

``There is a January hangover effect from the holiday shopping spree that consumers go on every year,'' said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York. ``Consumers tend to delay paying off their credit card bills in the first month after year-end holidays. Consumer debt levels are probably not rising as fast as the January figures indicate.''

Bankruptcies

Consumer finances have also improved. U.S. bankruptcy filings dropped in 2004 for the first time in four years, led by a decline in applications from consumers as the economy improved, according to a report from the Administrative Office of the U.S. Courts in Washington. The decline was the first since 2000.

Still, consumer confidence slipped last month as energy prices rose and the debate over Social Security intensified. The University of Michigan's final sentiment index dropped to 94.1 from 95.5 in January.

``Consumer spending will slow from what we have seen,'' said former Fed Governor Lyle Gramley, now a consulting economist at Stanford Group in Washington, in an interview. ``We don't have the effects of a tax cut. The benefits of mortgage refinancing are behind us.''

Non-revolving credit, which includes auto and mobile home loans, rose by $6.2 billion in January.

Car Sales

General Motors Corp., Ford Motor Co. and Toyota Motor Corp.'s January U.S. sales fell as automakers pared back incentives that fueled December gains. Nissan Motor Co. and DaimlerChrysler AG's Chrysler said sales rose.

U.S. sales fell 5.6 percent to 1.06 million cars and light trucks, Woodcliff Lake, New Jersey-based Autodata Corp. said. That was equal to an annual rate of 16.2 million, lower than the 16.4 million pace in January 2004, Autodata said.

The Fed's monthly report doesn't track loans secured by real estate, such as home equity lines of credit, which have grown in popularity over the past decade.

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