Once again, Americans are becoming more dependent on credit cards to finance their daily lives.
Latest Fed Consumer Credit G.19 The report showed that consumer credit rose at a seasonally adjusted annual rate of 5.8% in March, a significant acceleration from February’s pace of 2.1%. For the first quarter overall, consumer credit expanded at an annualized rate of 3.2%, with revolving credit, which includes credit cards, emerging as the main driver of the increase.
The data suggests that consumers remain willing — or increasingly required — to borrow despite rising interest rates, persistent inflation pressures, and what PYMNTS Intelligence found is a mismatch in confidence between income groups. Total outstanding consumer credit rose to $5.14 trillion in March, compared to $5.12 trillion in February. Renewable balances amounted to $1.34 trillion, while non-renewable balances such as car loans and student loans totaled about $3.8 trillion.
Credit cards are leading the recovery
The sharpest movement came from revolving debt. Revolving credit rose at an annual rate of 9.1% in March after little growth in February, when it rose just 0.3%. This pace represents one of the strongest rebounds in renewable borrowing since 2022, according to Federal Reserve data.
As PYMNTS reported, credit card balances tend to rise when consumers use cards to bridge gaps between income and expenses, fund discretionary purchases, or absorb increased everyday costs.
At the same time, the cost of carrying this debt remains high. The Federal Reserve reported that credit card APRs averaged 21% during the first quarter, holding near historically high levels despite easing inflation trends.
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The broader picture suggests that consumers have not stopped spending, but the composition of that spending may change. PYMNTS intelligence data indicates Many families use credit not for large, ambitious purchases, but for routine financial management and basic spending. Consumers view credit as a tool for flexibility and cash flow management. Among mortgage consumers, essential purchases outperformed discretionary spending by a large margin, highlighting how credit cards and installment options can be used to accommodate everyday expenses rather than occasional splurges.
Nearly 60% of consumers said they want rewards and adaptive payment options, while installment features tied to everyday spending are gaining more interest.
Different debts, different speeds
While revolving balances accelerated sharply, non-revolving credit also expanded, albeit at a slower pace. Nonrevolving debt — including auto loans and student loans — rose at an annual rate of 4.7% in March, up from 2.7% in February.
Student loan balances continued to rise, reaching about $1.87 trillion during the quarter, while auto loans remained relatively stable near $1.56 trillion.
The discrepancy between the growth of renewable and non-revolving debt may reflect the extent to which households are adapting to higher rates and economic uncertainty. Auto lending across the industry slowed as vehicle affordability pressures persisted, while student debt remained structurally elevated after repayment obligations resumed.
By contrast, credit cards remain instantly accessible and deeply rooted in everyday commerce. PYMNTS Intelligence Research found Mobile credit card apps influence which cards consumers use most frequently and how often they spend. Nearly 7 in 10 cardholders said app quality influences which card becomes the “top of their wallet,” with that number rising to 87% among Gen Z consumers.
The same report found that 32% of consumers increased their spending on the card after adopting its mobile app, underscoring how intertwined digital engagement and card use are.
However, this spending activity is unfolding against a backdrop of mixed financial confidence.
Separate PYMNTS report I found confidence of 15 points The gap between high- and low-income households, with consumers earning more than $150,000 reporting significantly stronger financial outlook scores than households earning less than $50,000.
Low-income households continue to manage debt and bills, but often without significant emergency savings or financial flexibility. The report noted that many consumers remain disciplined about debt management even as economic pressures continue.
