With the use of credit cards becoming more prominent and the availability of credit broader than ever. Why are credit not included in the Ms?

Answer 1

Credit cards are loans - unsecured loans to be exact. So the short answer is that loans are not considered money, thus it's not included in the money supply.

Consider what happens in a credit card transaction. Let's say you buy groceries and pay for it with a credit card. At the end of the night, the grocery store will settle out their card terminals and run a batch. Usually, within 24 hours, the grocery store will be credited with money in their account from the credit card company. This transaction is usually a M1 (checking like accounts) or M2 (savings and money market like accounts) transfer between the credit card company and the bank institution of the grocery store. Then when you pay your credit card bill, again it will be a M1 or M2 tranaction between your account to the credit card company.

If credit card loans were included at the time you swipe the card at the grocery store, then the transaction would be double counted. Loans are merely a demand obligation to pay at some future date. It is not counted as money flow until a payment is made. The loan itself is not money flow.