Consumers Cut Extras as Credit Card Debt Nears a Record

Consumer Credit Growth Rate

3.3%

The seasonally adjusted annual rate of consumer credit growth for June.

Revolving Debt Growth Rate

The annual growth rate of revolving debt in June after a contraction in May.

Total Consumer Credit Outstanding

$5.167 trillion

The total amount of consumer credit outstanding as of June.

§ 01 Executive Snapshot

What: Consumer credit growth resumes as credit card debt nears record levels.
Who: Federal Reserve, consumers, PYMNTS Intelligence.
Why it matters: Indicates financial strain on consumers as reliance on credit cards increases amidst stagnant income and rising prices.

Consumer credit expanded at a 3.3% seasonally adjusted annual rate in June, reversing a 0.3% contraction in May.
Revolving debt grew at a 6% annual rate after falling 4.7% in May, showing a swing of nearly 11 percentage points in one month.
Revolving balances reached $1.351 trillion in June, roughly $1 billion below their October 2024 peak.
Total consumer credit outstanding rose to $5.167 trillion, while nonrevolving credit increased at a steadier 2.3% annual rate.
Among paycheck-to-paycheck consumers, 64% reported side work earnings help cover basic living expenses, with 43% unable to cover a $1,200 emergency within a week.

The June credit data reflects a volatile borrowing environment, with significant swings in revolving debt indicating changing consumer behavior.
The increasing reliance on revolving credit suggests that consumer financial resilience is weakening, with many households cutting back on nonessential spending.

Immediate implications include potential increased defaults and financial stress as consumers lean more heavily on high-interest credit cards to manage cash flow.
Long-term implications may involve a shift in consumer spending habits, with a focus on essentials over discretionary purchases, affecting retail sectors.

Potential risks include rising interest rates, which could further strain consumers' ability to manage credit card debt.
Competition for consumer spending may intensify as businesses adapt to changing consumer financial behaviors and preferences.

Watch for future Federal Reserve interest rate decisions which could impact borrowing costs and consumer credit behavior.
Monitor consumer spending trends and credit utilization ratios, particularly among paycheck-to-paycheck consumers, to gauge financial health going forward.

§ 07

What is the current trend in consumer credit growth?

Consumer credit expanded at a 3.3% annual rate in June, reversing a previous contraction in May.

Why are consumers cutting back on nonessential spending?

Consumers are increasingly relying on credit cards due to financial strain from stagnant income and rising prices.

How much did revolving debt grow in June?

Revolving debt grew at a 6% annual rate in June, following a decline of 4.7% in May.

Who is most affected by the rising credit card debt?

Among paycheck-to-paycheck consumers, 43% reported being unable to cover a $1,200 emergency within a week.