Nonrevolving consumer debt, the category that holds car and student loans, grew at a seasonally adjusted annual rate of 4.1 percent in August, the Federal Reserve said October 7. Credit card borrowing moved the other way. Revolving credit shrank at a 4.2 percent annual rate, which held growth in total consumer credit to 1.9 percent. Household borrowing outside mortgages now stands at $5,196.8 billion, with $3,844.4 billion of it in loans that are repaid on a fixed schedule. The split describes a month when households kept adding to auto and education debt while paying down revolving balances.
The August reading leaves a question for anyone with a loan payment due each month: is household borrowing getting heavier or lighter? Total consumer credit, the Fed’s measure of household debt other than mortgages, grew 1.9 percent in August after a 4.2 percent pace in July. Nonrevolving debt, mostly car and education loans, kept growing at better than 4 percent, while the card-heavy revolving side contracted. People with an auto loan or student debt sit on the growing side of that split, and people carrying a card balance sit on the shrinking side.
The 4.1 percent nonrevolving growth rate is a Fed estimate that is replaced with a new one around the fifth business day of every month.
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What counts as nonrevolving credit
The Fed’s explanation of the G.19 release defines nonrevolving credit as closed-end borrowing repaid on a set schedule, where taking on more debt means signing a new contract. Motor vehicle and education loans make up most of it, and boat, recreational vehicle and personal loans are also counted. Mortgages and home equity loans are left out entirely, because G.19 excludes loans secured by real estate. A 1.9 percent growth rate for total consumer credit therefore says nothing about home borrowing.
The two pieces are very different in size. Of the $5,196.8 billion outstanding in August, nonrevolving loans account for $3,844.4 billion, about 74 percent, and revolving credit for $1,352.4 billion, about 26 percent. That weighting explains the headline number. Growth of 4.1 percent on the larger piece added roughly three points to the total, and a 4.2 percent decline on the smaller piece took away a little over one, which leaves the 1.9 percent the Fed reported.
The August figures are a step down from the month before for installment debt. When the Fed published July data on September 8, it showed nonrevolving credit growing at a 4.8 percent annual rate, with revolving credit up 2.5 percent and the total up 4.2 percent. Measured against those first July estimates, nonrevolving growth slowed by 0.7 points, and revolving credit swung by 6.7 points, from growth to contraction. Monthly G.19 numbers are revised as new benchmark data arrive, so both months can move.
A shrinking card side, with no reason given
The Fed’s release reports how fast the balances changed and does not say why revolving credit fell in August. The nearest context comes from the Federal Open Market Committee’s minutes of its September 15-16 meeting, which said credit card balances grew moderately in the second quarter and that average card limits kept rising. Staff also described consumer credit as generally available to most households. A one-month decline in a series that grew earlier in the summer is a change in direction, though a single month does not make a trend.
The minutes also record that several participants saw strain among lower-income families. They said low- and moderate-income households faced pressure, with higher energy prices weighing disproportionately on their real disposable income. Consumer spending overall was described as solid, helped by stock market gains for higher-income households. A shrinking revolving balance can reflect borrowers paying cards down or lenders and borrowers pulling back, and the G.19 total cannot tell the two apart.
G.19 also measures how much households owe, not whether they are keeping up. The minutes do not discuss delinquency rates, and the August release carries no information on missed payments. Growth in car and student loan balances can come from more people borrowing, larger loans or higher vehicle prices, and the release gives no breakdown among those causes. Only the level and the pace are reported.
Rates behind the borrowing
The August credit data came after a policy change, not before one. On September 16 the Committee, chaired by Kevin Warsh, voted 12-0 to raise the federal funds target range by a quarter point to 3-3/4 to 4 percent, effective September 17. The Fed set its primary credit rate at 4.0 percent. Loans taken out from here on are priced against a higher benchmark than most of the debt counted in the August total.
For the moment, the minutes found little change in what consumers pay. Staff said borrowing costs for consumer credit outside residential mortgages were little changed. Participants also said that another increase in the target range would likely be appropriate by year end. That sets the Committee’s next meeting, October 27 and 28, as the next event that could change loan pricing before another reading on household borrowing arrives.
When the next consumer credit report arrives
The Fed’s consumer credit release page says G.19 data come out around the fifth business day of each month, which puts the September figures in early November. The page carries the Fed’s full tables and an announcements feed for new releases, so the numbers can be read directly rather than through a summary. Each new release also restates the prior months, which is why the July figures cited above may differ from what the Fed now shows.
The number to watch is whether revolving credit stays negative after its 4.2 percent drop. If cards keep shrinking while nonrevolving debt holds above 4 percent, the $3,844.4 billion installment pile will take a larger share of the $5,196.8 billion total each month, and growth in overall household debt will rest almost entirely on car and education loans. If revolving credit rebounds, August will look like a one-month dip inside a year of steady borrowing.
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This article was produced with AI assistance and reviewed by The Money Overview’s editorial team.
