CHICAGO–A new analysis suggests there is a “more complex reality” to be understood when it comes to consumers increasing use of credit cards, and it “challenges” the assumption people are struggling to make ends meet.
That card balances are increasing is no secret the company said. According to TransUnion’s newly released Q1 2025 Credit Industry Insights Report (CIIR) total consumer balances have steadily increased over recent years. Total balances in nominal dollar terms (before adjusting for inflation) across all consumer credit products rose from $14.1 trillion in Q1 2020 to $18.0 trillion in Q1 2025, approximately 28%, the company added.
‘Modest’ Growth
In addition, TransUnion noted the cumulative Consumer Price Index increase over that same time period, as measured by the U.S. Bureau of Labor Statistics, was nearly 24%.
“When adjusted for inflation, total balance growth in real dollar terms is more modest, amounting to $0.5 trillion over the five-year period, an increase of closer to 3%,” TransUnion said.
“TransUnion said its analysis also revealed that inflation-adjusted balances for consumers actually declined in real dollar terms across the majority of credit risk tiers from 2020 to 2025.
“This decrease was most pronounced in the prime risk tier, which saw a 14% drop in balances after adjusting for inflation,” the company said. “In contrast, super prime consumers experienced an 18% growth in balances over the same period. Much of the increase for super prime borrowers was attributed to higher mortgage balances.”
The only other risk tier to see an inflation-adjusted increase over the period was subprime at 1.9%, TransUnion added.
‘Beyond Balances’
“Our latest analysis reveals a picture of credit usage that goes beyond simply an increase in total balances,” EVP and Head of Financial Services Jason Laky said in a statement. “When we account for the recent period of higher inflation, the rise in balances suggests that consumers in most risk tiers are not over-extended. In fact, many consumers experienced significant income gains since 2019, which have enabled most borrowers to effectively manage their debt levels.”
‘Challenge the Idea’
Added Michele Raneri, VP and head of U.S. research and consulting, “These findings challenge the idea that consumers are simply accumulating credit card debt. Instead, they highlight how balances reflect the current economic reality. It’s understandable that only subprime consumers have experienced an inflation-adjusted increase in real credit card average balances, as this demographic has likely felt the impact of higher costs most acutely. But for other risk tiers of borrowers, their card balance growth has been less than the rate of inflation, indicating that many consumers may have further borrowing capacity.”
