US Consumer Debt Increases to $5.10 Trillion in Q3

According to the Federal Reserve’s latest G.19 Consumer Credit Report, with additional analysis provided by the National Association of Home Builders (NAHB), total outstanding US consumer debt stood at $5.10 trillion for Q3, increasing at a seasonally adjusted annualized rate of 3.28%.

In general, consumer debt has been slowing over the past two years, peaking at a high rate of 9.16% in 2022Q2. However, Q3 experienced an uptick in growth from the previous quarter’s rate of 1.14%.

NAHB notes that the G.19 report excludes mortgage loans, so the data primarily reflects consumer debt in the form of student loans, auto loans, and credit card debt. As consumer spending has outpaced personal income, savings rates have been declining and consumer debt has increased. Previously, consumer debt growth had been slowing, as high inflation and rising interest rates led people to reduce their borrowing. However, the growth rate ticked up in the latest quarter, possibly reflecting expectations of rate cuts that took place at the quarter’s end.

Nonrevolving Debt

Nonrevolving debt, largely driven by student and auto loans, reached $3.75 trillion (seasonally adjusted) in Q3, marking a 3.46% increase at a seasonally adjusted annual rate. This growth rate is notably higher than in the previous six quarters, all of which remained below 2.5%.

Revolving Debt

Revolving debt, primarily credit card debt, reached $1.36 trillion (seasonally adjusted) in Q3, rising at an annualized rate of 2.79%. This marked a slight increase from Q2’s 2.58% rate but was notably down from the peak growth rate of 17.58% seen in 2022Q1. The surge in credit card balances in early 2022 was accompanied by an increase in credit card rates which climbed by 4.51 percentage points over 2022. This was an exceptionally steep increase, as no other year in the past two decades had seen a rate jump of more than 2 percentage points.

NAHB says that comparatively, so far in 2024 the credit card rate increased 0.17 percentage points. For Q3, the average credit card rate held by commercial banks (not seasonally adjusted) reached a historic high (since data has been recorded) of 21.76%, an increase from 21.51% last quarter.