Card Borrowing Snapped Back in September as Consumer Credit Rose at a 6.4% Pace

U.S. consumer credit rose at a 6.4% annual rate in September, powered by a 14.5% surge in revolving credit that reversed August's decline.

September's pace far outran August's revised 1.9% annual rate and July's revised 4.1%. August's total flow was $98.3 billion at an annual rate.

The month's flow ran at $334.1 billion at a seasonally adjusted annual rate. Total balances rose $27.8 billion in the month, a TickerGrove calculation from the release's levels, to $5.22 trillion from $5.2 trillion.

Card balances reversed August's drop

Revolving credit, mostly credit cards, jumped at a 14.5% annual rate in September. In August it had fallen at a revised 4.4% annual rate, with the flow running at negative $59.6 billion at an annual rate.

July's revolving pace, by contrast, was a modest 2.4%. September's revolving flow ran at $195.6 billion at an annual rate.

Card and other revolving balances rose $16.3 billion in the month, a TickerGrove calculation, to $1.37 trillion from $1.35 trillion.

Across the third quarter as a whole, revolving credit rose at a 4.1% annual rate. For the quarter overall, consumer credit rose at a 4.2% annual rate, with nonrevolving credit also up at a 4.2% annual rate.

That steadier quarterly pace is why one hot month reads as a snap-back first, and a trend only if it repeats.

Nonrevolving credit kept its steadier pace

Nonrevolving credit rose at a 3.6% annual rate in September, on a flow of $138.5 billion at an annual rate. August's pace was a revised 4.1%, after 4.7% in July, and August's nonrevolving flow was $157.9 billion at an annual rate.

The category covers auto and student loans and is usually the steadier half of household borrowing. Its balances reached $3.86 trillion in September, from $3.84 trillion in August.

What households pay for the borrowing

The average rate on credit card accounts assessed interest was 22.36% in the release's latest quarterly terms reading. That was up from 22.15% in the second quarter.

Across all card accounts, the average rate was 21.19%, up from 20.94% in the second quarter. New-car loans at banks averaged 7.54% over 60 months and 7.17% over 72 months, while 24-month personal loans averaged 11.90%.

A record stock of debt, against strong hiring

September's $5.22 trillion total was its highest level in the release's data. Student loans accounted for $1.88 trillion of the stock and motor vehicle loans $1.59 trillion, on the release's not seasonally adjusted memo lines.

The borrowing came alongside resilient hiring. Employers added 165,000 jobs in October, the Bureau of Labor Statistics reported on Friday morning.

What remains unknown

Whether September's surge is a one-month snap-back or the start of a faster borrowing pace is unresolved. The G.19 report carries no delinquency or charge-off data, so it cannot say whether households are keeping up with the balances.

September's figures are preliminary and can be revised, as August's were in this release. What to watch: the October consumer credit release in early December, Tuesday's October consumer price index, and the Federal Reserve's December meeting.