Households are still taking on new debt

April 8, 2026

Consumers took on more debt in February.  Consumer credit outstanding rose 2.2% at a seasonally adjusted annual rate, up from a 1.8% gain in January. Consumer credit rose 3.2% compared to a year ago, the largest year-over-year increase since late 2023.

Revolving debt, made up primarily of credit cards, edged 0.6% higher. The gains in December and January were revised lower. Retail sales surprised to the upside in February, partially recovering from January’s weak reading due to bad weather. Some initial tax refunds and the anticipation of refunds likely dampened credit card demand.

Nonrevolving debt, which includes car loans, student loans and personal loans, increased at an annual rate of 2.8% in February, up from 1.6% in January. Vehicle sales rose in February compared to January. Used vehicle prices are moving higher; tax refunds are supporting demand. 

Interest rates for new car loans rose in February compared to the end of 2025. Loans lasting 60 months increased to 7.5% from 7.2%; 72-month loans edged higher to 7.6% from 7.5%. That marks a reversal of a steady decline since early last year. It puts car purchases even more out of reach for lower-income consumers.

Student loan debt continues to compound as more borrowers face default. That reduces credit scores and depresses consumption among many Millennial and Gen X borrowers.