From Pymnts · PYMNTS · · 1m 10s
Consumers Get Choosier About Credit
Credit card borrowing slows as consumers prioritize debt management.
In brief
Credit card borrowing slows as consumers prioritize debt management. Consumer credit growth slowed to 1.9% in August as revolving credit contracted at 4.2% annual rate, with higher borrowing costs pushing households to weigh financing decisions. Originally reported by Pymnts.
Consumer credit growth slows
Federal Reserve data shows consumer credit expanded at a 1.9% annual rate in August, down from July's 4.1% pace.
Nonrevolving credit drives growth
Nonrevolving credit expanded at a 4.1% annual rate, including auto and student loans.
Revolving credit contracts
Revolving credit contracted at a 4.2% annual rate, with balances falling to $1.352 trillion.
Higher borrowing costs emerge
Average APR on credit accounts rose to 22.36% in the third quarter, up from 22.15%.
Debt management shifts
53% of paycheck-to-paycheck consumers reduced nonessential spending in the past year, while 23% increased it.
Financing costs rise
Average new-car loan rates increased to 7.54% from 7.14% for 60-month loans in the third quarter.
Households weigh financing decisions
Higher borrowing costs push households to carefully consider each financing decision, including extending repayment periods.
The essence
Consumer credit growth slowed to 1.9% in August as revolving credit contracted at 4.2% annual rate, with higher borrowing costs pushing households to weigh financing decisions.
