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The Federal Reserve’s latest G.19 consumer credit report showed consumer credit increased at a seasonally adjusted annual rate of 5.8% in March, up sharply from February’s 2.1% pace. For the first quarter overall, consumer credit expanded at an annualized rate of 3.2%, with revolving credit—largely credit cards—emerging as the primary driver of the increase.
Total consumer credit outstanding rose to $5.14 trillion in March from $5.12 trillion in February. Revolving balances reached $1.34 trillion, while nonrevolving balances, including auto and student loans, totaled roughly $3.8 trillion.
Revolving debt accelerated to a 9.1% annual rate in March after barely growing in February, when it rose at a 0.3% pace. The March result marked one of the strongest rebounds in revolving borrowing since 2022, according to the Fed data.
The report suggests consumers are using credit to bridge gaps between income and expenses, finance discretionary purchases, and absorb rising everyday costs. However, the cost of carrying that debt remains high: the Fed reported that credit card APRs averaged 21% during the first quarter, staying near historically elevated levels despite easing inflation trends.
PYMNTS Intelligence data indicates that credit use is increasingly focused on routine financial management and essential spending rather than large, aspirational purchases. Among subprime consumers, essential purchases outweighed discretionary spending by a wide margin, reflecting how credit cards and installment options are being used to cover everyday expenses.
In addition, nearly 60% of consumers said they want adaptable rewards and payment options, and installment features tied to everyday spending are gaining traction.
Nonrevolving credit also increased, but at a slower pace. Nonrevolving debt, including auto loans and student loans, rose at a 4.7% annual rate in March, compared with 2.7% in February.
Student loan balances continued to climb, reaching about $1.87 trillion during the quarter, while motor vehicle loans remained relatively stable near $1.56 trillion.
The divergence between revolving and nonrevolving debt growth may reflect different household responses to higher interest rates and economic uncertainty. Auto lending has slowed amid ongoing vehicle affordability pressures, while student debt remains elevated following the resumption of repayment obligations.
Credit cards remain immediately accessible and embedded in everyday commerce. PYMNTS Intelligence research found that mobile credit card apps influence which cards consumers use most frequently. Nearly 7 in 10 cardholders said app quality affects which card becomes their “top of wallet,” rising to 87% among Gen Z consumers.
The same research found that 32% of consumers increased spending on a card after adopting its mobile app, linking digital engagement with card usage.
That spending activity is occurring alongside uneven financial confidence. A separate PYMNTS report cited a 15-point confidence gap between high- and low-income households: consumers earning more than $150,000 reported significantly stronger financial outlook scores than households earning under $50,000.
Lower-income households continue managing debt and bills, but often with limited emergency savings or financial flexibility. The report noted that many consumers remain disciplined about debt management even as economic pressure persists.
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