Credit Data Shows Spending Discipline as Card Balances Rise

The Federal Reserve’s latest consumer credit data points to a familiar seasonal pattern, with revolving balances moving higher as households navigated year-end expenses and holiday purchases.

According to the Fed’s December G.19 report released Friday afternoon (Feb. 6), total consumer credit expanded at a seasonally adjusted annual rate of 5.7%, a sharp pickup from November’s 1.1% pace.

Revolving credit led the acceleration, rising at an annualized 12.6% after contracting the prior month. In level terms, overall consumer credit outstanding reached roughly $5.11 trillion, underscoring the scale of borrowing now embedded in household finances.

Revolving credit includes, but is not limited to, credit cards. Its late-year resurgence highlights how households used credit lines to navigate holiday expenses and ongoing cost pressures. Installment lending continued to grow at a steadier 3.2% annual rate, reflecting more cautious borrowing for non-revolving, big-ticket purchases such as autos and education.

Credit card APRs continue to hover near 21%, with auto and personal loan rates also well above pre-pandemic levels. Yet December’s rebound shows consumers still engaging with credit selectively, using revolving lines as short-term liquidity even in a higher-rate environment.

Revolving Credit as Holiday Bridge

PYMNTS Intelligence research helps explain why revolving credit remains so central. Consumers use credit in two distinct ways: as a planning tool for anticipated purchases and as a safety net for unexpected expenses. Slightly more than half of consumers who used credit said those purchases were mostly planned, while nearly one-third reported a mix of planned and spontaneous spending, highlighting credit’s dual role in household cash-flow management. That flexibility matters most for younger consumers and those under financial strain.

Subprime consumers leaned more heavily on credit for essentials than for non-essentials, illustrating how revolving balances often absorb rising living costs when income falls short.

Payment behavior reflects that pressure. The data show that 42% of consumers reported paying off their full credit card balance, while 15% paid the minimum or less. Among households struggling to pay monthly bills, nearly three in 10 made only minimum payments. Even consumers not living paycheck to paycheck saw balances rise, pointing to a broad seasonal draw on revolving credit rather than stress confined to a narrow segment.

The climb in revolving balances is visible in PYMNTS Intelligence’s January data on credit card usage. Average monthly card balances rose by nearly $200 from April into December, reaching $3,564, with increases recorded across most income and financial lifestyle groups.

For consumers living paycheck to paycheck and struggling to cover monthly bills, balances rose by almost $600 over the same period. Even households not living paycheck to paycheck saw their average balances move higher, a reminder that seasonal spending and rising living costs are affecting a wide swath of the population.

Networks See Spending Hold Firm

While revolving balances climbed, the payments ecosystem itself showed steady momentum. PYMNTS coverage of Visa, Mastercard and American Express earnings indicates that all three networks posted transaction and spending volume growth in their most recent quarters, supported by everyday purchases, travel and digital commerce.

Taken together, those results align with the Fed’s aggregate data. Consumers may be borrowing more on revolving lines, but they are also continuing to transact at scale. Holiday commerce did not stall, even as households leaned more heavily on credit to manage timing mismatches between income and expenses.

Importantly, PYMNTS Intelligence finds that credit is not viewed solely as emergency funding. Many consumers see revolving products as part of a longer-term financial strategy. Building or improving a credit score ranks among the top motivations for seeking credit products, particularly among younger adults, framing card use as a pathway toward broader financial access rather than merely short-term borrowing.

What December’s Jump Signals

The December surge in revolving consumer credit carries a multi-faceted message. Elevated balances and high APRs point to affordability pressures that remain unresolved. At the same time, rising network volumes and PYMNTS Intelligence data underscore consumer resilience and the stabilizing role of revolving credit in sustaining holiday spending.

In practical terms, the rebound shows a system performing its core function. Credit provided liquidity when households needed it most, allowing consumers to bridge cash-flow gaps, cover essentials and participate in seasonal commerce. Just a few weeks into 2026, some observers look toward credit as a barometer of strain, but it continues to be a central pillar supporting both household finances and the broader economy.