Smart Borrower Blog

Consumer Credit Debt Grows at Fastest Pace in 12 Months

Nov 8th, 2017 @ 6:40 PM by Amber Nelson

U.S. consumer borrowing jumped up in September, according to data from the Federal Reserve, fueled by a surge in auto sales and student loans.

Total consumer credit debt rose $20.8 billion in September, or at a 6.6% annualized rate to $3.79 trillion in all. That is the fastest pace since November 2016. September’s growth exceeded economists’ predictions of a $17.4 billion increase.

Non-revolving credit, which include student loans and car loans, surged 6.3 percent in September, the largest gain since January and up from just 3.3% growth in August. An increase in auto loans was expected as borrowers in Texas and Florida rushed to replace vehicles that were destroyed by recent hurricanes. For the whole third quarter, auto loans increased $19.3 billion.

Student loan debt also contributed, as federal government lending – which mainly reflects student loans originations – rose $35.2 billion in the third quarter. Student loans made up 53% of all non-revolving credit in September.

Revolving credit, which includes credit card accounts, soared at an annual rate of 7.7% in September, an increase from August’s 6.7% pace. The Fed survey found that lenders now hold $972 billion in credit card debt, a 5.8% increase from the previous year.

The Federal Reserve survey does not track mortgage loan or home equity borrowing, but with home prices continuing to rise, many Americans may be using their homes to generate cash flow. Gains in the stock market may also be helping some consumers feel confident enough to take on more debt.

While borrowing increased dramatically from the month before, on a quarterly basis consumer credit borrowing actually slowed, falling to an annual rate of 5.5% down from 6.7% in 2016. Overall consumer credit debt is growing at a modest pace, and the September report has not been a cause for concern among economists or investors. The markets have had no visible reaction to the report.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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