WASHINGTON—There was a surge in revolving credit among U.S. consumers during July, growing at a 9.7% annual rate, much higher than prior months, according to new Federal Reserve data.
In its analysis, PYMNTS Intelligence noted that consumers are relying more on credit to cover gaps between spending and slower-growing incomes, with planned purchases dominating credit use.
PYMNTS Intelligence said its analysis of the data shows:
- Installment plan adoption is rising, especially for private label cards, “signaling a shift in how those expenses are managed.” New data released Monday (Sept. 8) by the Federal Reserve shows that, in July, consumer credit increased at a seasonally adjusted annual rate of 3.8%. “This marks a big acceleration from the 2.3% increase registered in June and the 1.9% increase of May,” according to PYMNTS Intelligence.
- Revolving lines in particular spiked, growing in July at an annual rate of 9.7%, following a slim gain of 0.7% in June and a 1.5% dip in May. Nonrevolving credit, which includes auto loans and student loans, increased at an annual rate of 1.8%, less than in the two months prior (2.8% and 3.1%), the company said.
“Overall credit lines are therefore growing at a greater pace than in the prior quarter, when they jumped 2.8% at an annual rate, which in turn was more than the 1.2% annualized rise,” according to PYMNTS.
Minding the Gap
PYMNTS noted it had found in an earlier report that credit may be filling the gap between take-home pay and resilient spending. “The median one-year-ahead growth expectation for households’ spending was 5%, while incomes are expected to grow at a comparatively slower pace, at 2.9%,” it said.
Latching onto Credit
According to PYMNTS, the Fed data points toward some improvement in credit availability compared to the jump in early 2025. It noted that:
- 41% of survey respondents in August said it was somewhat or much harder to get credit relative to a year ago, while 45% said they expect it will get harder in the year to come.
- Both figures peaked at 45% and 48%, respectively, in April.
- Debt delinquency expectations remain stable, with the mean probability of not being able to make minimum debt payments over the next three months at 13.1%.
