Revolving credit drove more than half of a $28 billion expansion in total consumer debt during September, pointing to a sharp shift toward high-cost borrowing as household expenses outpace earnings, according to data released by the Federal Reserve.
Revolving Balances Climb as High Interest Rates Strain Cardholders
- Revolving balances climbed to $1.369 trillion in September, marking a steep reversal from a 4.4% annualized decline the previous month to a 14.5% annualized increase.
- Among cardholders paying in full less often than a year ago, 29.6% cited rising regular expenses and 27.5% reported that those costs exceeded their income.
- The average commercial bank card rate charged interest at 22.36% for the third quarter, turning short-term cash management into a significant long-term claim on future income.
Federal Reserve Data Shows September Credit Surge
The Federal Reserve’s G19 report showed that total consumer credit rose to $5.224 trillion in September, growing at a seasonally adjusted annual rate of 6.4%. That pace accelerated from 1.9% in August, driven almost entirely by the rebound in revolving credit, which includes credit cards.
While revolving credit makes up roughly a quarter of all outstanding consumer balances, it accounted for more than half of September’s $28 billion increase. Meanwhile, nonrevolving credit—a category that captures auto loans and student debt—slowed to an annualized growth rate of 3.6% in September, down from 4.1% in August and 4.7% in July.
| Credit Category | September Balance | September Growth Rate (Annualized) | August Growth Rate (Annualized) |
|---|---|---|---|
| Total Consumer Credit | $5.224 trillion | 6.4% | 1.9% |
| Revolving Credit (Credit Cards) | $1.369 trillion | 14.5% | -4.4% |
| Nonrevolving Credit (Auto/Student) | Not Listed | 3.6% | 4.1% |
Rising Expenses Drive Lower Repayment Rates
Among cardholders who reported paying their statements in full less often than they did a year ago, 29.6% pointed to climbing regular expenses. Another 27.5% stated that those ongoing bills had surpassed their total income.
By contrast, only 9.2% of respondents blamed a large, unexpected expense for their changing payment habits. Separate survey data from July isolated groceries, utility bills, and fuel or transportation as the primary sources of seasonal budget pressure.
The repayment shift is heavily concentrated among financially strained households. Among consumers living paycheck to paycheck who struggle to cover bills, 40.7% said they paid in full less often in October compared to the prior year. For consumers not living paycheck to paycheck, that figure sat at just 4.5%.
Cautious Consumers Manage Existing Debt
Consumers who live paycheck to paycheck but are still managing to cover their bills without difficulty are adopting a defensive posture. In October, 21.2% of this demographic said worries about their jobs or incomes led them to pay down debt faster or avoid taking on new obligations, up from 15.2% in August.
Confidence in managing existing debt over the coming year dropped to 61.1% in October from 71.2% in September. This decline occurred even as overall consumer sentiment held relatively steady and more respondents expressed optimism regarding the national economy.
The Federal Reserve placed the third-quarter average annual interest rate at 22.36% for commercial bank card accounts that accrued interest. Among cardholders who paid in full less often, 13.2% noted that their primary motivation was simply to preserve cash on hand to bridge the gap before payday.
That same caution affects larger financial commitments. Among consumers who chose a cheaper option, delayed a major purchase, or canceled one entirely, 16.4% cited saving money or paying down debt as the driving factor, while 14.7% pointed directly to financing costs.
Further details on consumer credit trends are available in the official Federal Reserve G19 report.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
