Americans Add $18 Billion in Credit as Borrowing Accelerates

In July, consumer credit across cards and long-term loans expanded by 4.2% annually, driven by a surge in nonrevolving credit and a modest rise in revolving credit, according to the Federal Reserve's latest G.19 report. Nonrevolving credit, which includes auto and student loans, grew by 4.8%, the strongest performance in over a year, while revolving credit, encompassing credit cards, increased by 2.5%.

The total rise in consumer credit amounted to approximately $18.1 billion for the month, with nonrevolving credit contributing about $15.3 billion and revolving credit adding roughly $2.8 billion. As of July, revolving credit balances reached $1.357 trillion, surpassing the previous all-time high of $1.352 trillion set in October 2024.

The total consumer credit stood at $5.186 trillion, with $3.829 trillion in nonrevolving debt. The PYMNTS report "More Ways to Pay: The Data Behind Millennials' Expanding Payment Toolkit" indicates that in July, 70% of millennials used debit cards and 66% used credit cards for retail purchases within the past year. However, debit cards accounted for 43% to 47% of in-store transactions, compared to 25% to 27% for credit cards.

The G.19 data doesn't reveal why consumers are borrowing, whether it's due to financial constraints, confidence in making larger purchases, or simply because financing is readily available. It also cannot determine how much of the borrowing translates into increased consumption. The upcoming Fed reports will clarify whether this borrowing surge is a temporary summer phenomenon or the start of a more sustained trend in household credit.

If credit growth continues alongside robust spending, it would suggest households are still eager to take on additional obligations while making purchases. Conversely, if spending weakens while balances keep rising, it could indicate that income is already allocated due to earlier borrowing. Despite the upward revisions to May's reported credit contraction, there is currently little evidence to suggest consumers are pulling back on borrowing as they enter the second half of 2026.