Consumer Borrowing Rises Less Than Expected in June

Consumers’ total outstanding credit increased by $8.9 billion in June, with a rise in non-revolving credit partially offset by a decline in revolving credit.

Non-revolving credit increased by $10.6 billion during the month, while revolving credit declined by $1.7 billion, the Federal Reserve said Wednesday (Aug. 7) in its monthly report on outstanding consumer credit.

In terms of percentages, consumer’s total outstanding credit increased at an annual rate of 2.1% in June, with non-revolving credit rising 3.4% and revolving credit dropping 1.5%, according to the report.

The increase brought consumers’ total outstanding credit to $5.08 trillion, per the report.

The $8.9 billion rise in consumer borrowing in June was lower than that forecast by economists. Bloomberg reported Wednesday that the median estimate of those it had surveyed anticipated an increase of $10 billion.

The decline in revolving credit was the biggest seen since early 2021, while the rise in non-revolving credit was the most recorded in a year, according to the report.

National credit-scoring company VantageScore said in a July 30 press release that it saw originations reach record highs year-to-date across all generations and credit tiers.

The company saw the year’s highest levels of originations across all product categories, including personal loans, credit cards, auto loans and new mortgages, according to the release.

VantageScore said personal loans saw the biggest increase, with consumers in need of credit using these loans to help extend their resources as needed.

“It is clear that lenders are extending new credit, but consumers are showing signs of increased stress,” the company said in the release.

The release of the Federal Reserve’s report on outstanding consumer credit comes shortly after its latest quarterly report on household debt that found that overall indebtedness in the second quarter was up by 0.6% and reached an aggregate of $17.8 trillion.

Some of the data points may indicate cause for concern, PYMNTS reported Tuesday (Aug. 6). For example, 9.1% of credit card balances and 8% of auto loan balances have transitioned into delinquency over the past year. The Fed said in its report that credit card delinquency rates remain elevated.