Consumer Credit Rises $8.3 Billion in August, Missing Forecasts as Credit Card Balances Post Their Steepest Drop in a Year
U.S. consumer credit rose $8.28 billion in August, well short of the $15 billion economists expected, according to Federal Reserve data released October 7. Revolving credit, mostly credit card balances, fell $4.79 billion, while auto and student loans kept total borrowing growing at a 1.9% annual rate, the slowest pace since May.
Key Takeaways
- Total consumer credit grew at a 1.9% seasonally adjusted annual rate in August, less than half of July’s revised 4.1% pace.
- Revolving credit contracted at a 4.2% annual rate after expanding 2.5% in July, the steepest monthly decline in at least a year.
- Revolving balances fell to $1.352 trillion from a record $1.357 trillion in July.
- Nonrevolving credit, which includes auto and student loans, rose $13.07 billion, growing at a 4.1% annual rate versus 4.7% in July.
- July’s gain was revised down to $17.74 billion from the initially reported $18.06 billion.
- Total consumer credit outstanding reached $5.197 trillion, up from $5.189 trillion in July.
The Headline Miss Hides a Shift in How Consumers Borrow
On the surface, August’s report reads as a simple miss: an $8.28 billion gain against a $15 billion consensus. The composition tells a more useful story. Consumers did not stop borrowing. They stopped adding to the type of debt they can adjust most quickly.
Revolving credit is the most flexible line on a household balance sheet. Card balances can rise or fall month to month based on spending, payoffs and confidence, while auto loans and student loans follow fixed schedules set at origination. When revolving debt shrinks while installment debt keeps growing, it often signals that households are either paying down cards or holding back on discretionary spending.
August’s $4.79 billion revolving decline is notable because it follows a record. Card balances peaked at $1.357 trillion in July, then retreated to $1.352 trillion a month later.
Credit Card Rates Remain Above 22%
The pullback comes as card borrowing stays expensive. The Federal Reserve’s most recent quarterly rate data showed the average APR on credit card accounts assessed interest rose to 22.15% in the second quarter of 2026, up from 21.52% in the first quarter. The average across all card accounts, including those that pay in full, was 20.94%.
Those rates face more upward pressure, not less. The Federal Reserve raised its benchmark range to 3.75% to 4.00% on September 16, its first increase in more than three years, and most card rates are tied to the prime rate, which moves with Fed policy. Other borrowing costs are elevated too: the average rate on a 60-month new car loan at commercial banks was 7.14% in the second quarter, and 24-month personal loans averaged 11.86%.
The latest numbers fit a broader pattern in which rising borrowing costs are pushing the economy onto two separate tracks, with some households absorbing higher rates while others cut back. A falling revolving balance can reflect either group: consumers paying down expensive debt, or consumers with less room to spend.
Installment Debt and Student Loans Carry the Growth
Nonrevolving credit did the heavy lifting in August. The category grew $13.07 billion, and federal government-held consumer credit, almost entirely student loans, climbed to $1.622 trillion from $1.608 trillion.
Growth in nonrevolving credit has been firmer than during much of late 2025 and early 2026, though the August pace of 4.1% eased modestly from July. Because these loans carry fixed payment schedules, rising installment balances add to monthly obligations that households cannot quickly cut, which can limit how much flexibility they have for discretionary spending later in the year.
What the Report Signals for Businesses Heading Into the Holidays
For retailers, restaurants and consumer-facing small businesses, the August data arrives at a sensitive point in the calendar. Fourth-quarter sales depend heavily on discretionary spending, and credit cards finance a large share of holiday purchases.
The credit report lines up with other recent readings. The Conference Board’s Consumer Confidence Index fell to 81.9 in September, its lowest level since 2014, and the Bureau of Labor Statistics reported that employers added just 29,000 jobs in September as unemployment rose to 4.2%. A consumer who is less confident about income and facing card rates above 22% has clear reasons to pull back on revolving debt.
Business owners should treat one month of data with caution. Revolving credit is volatile, and monthly figures are frequently revised. Still, a decline following a record high, alongside softening confidence and higher policy rates, is worth factoring into inventory, staffing and promotional plans for the fourth quarter. The next reads on household borrowing come with the September consumer credit release and the New York Fed’s third-quarter household debt report, both due in early November.
FAQs
How much did consumer credit rise in August 2026?
U.S. consumer credit rose $8.28 billion in August 2026, below the $15 billion economists expected. Total credit grew at a 1.9% seasonally adjusted annual rate.
Did credit card debt go down in August 2026?
Yes. Revolving credit, which is mostly credit card debt, fell $4.79 billion in August, a 4.2% annual rate of decline. Balances dropped to $1.352 trillion from a record $1.357 trillion in July.
What is the average credit card interest rate in 2026?
The Federal Reserve’s latest quarterly data showed the average APR on credit card accounts assessed interest was 22.15% in the second quarter of 2026, up from 21.52% in the first quarter.
What is the Federal Reserve G.19 report?
The G.19 is the Federal Reserve’s monthly consumer credit report. It tracks revolving credit such as credit cards and nonrevolving credit such as auto and student loans, excluding mortgages, and is generally released around the fifth business day of each month.
