Consumer Credit Growth Slows as Revolving Debt Declines, Non revolving Edges Up

According to the latest release from the Federal Reserve, total U.S. consumer credit increased at an annual rate of just 0.1% in August 2025, signaling a sharp slowdown in borrowing activity. 

Notably, revolving credit — credit card debt and other flexible borrowing — declined at an annual rate of about 5.5%, while non-revolving credit — such as auto loans, student loans and other fixed-installment debt — rose around 2.0%. 

What does this divergent trend tell us? The drop in revolving debt suggests consumers may be tightening spending or paying down high-interest balances. In contrast, growth in non-revolving debt might reflect continued borrowing for large purchases or education.

From a macro perspective, this shift could mean the typical consumer’s margin of discretionary borrowing is narrower — fewer household resources are going toward flexible debt. That may dampen economic growth via reduced consumer spending.

However, the rise in fixed-installment borrowing suggests that major commitments (e.g., cars, school) are still being financed, albeit in a more measured way.

The Federal Reserve and analysts will be watching these trends for signs of where the economy might be headed. A sustained drop in revolving credit may reduce risk from high-interest debt overhang, but it also points to households that may be under strain.

For individual consumers, the message is clear: maintaining manageable debt levels, checking credit terms and avoiding high-interest borrowing remain important. In a time of tighter borrowing, staying disciplined may make the difference between stability and stress.