Credit card borrowing surges

November 6, 2026

Consumer credit outstanding jumped 6.4% in September at a seasonally adjusted annualized rate. That is an acceleration from 1.9% in August and 4.1% in July.

Consumer credit increased 4.2% in the third quarter. That is up from 3.1% in the second quarter and 2.6% in the first. Consumers are turning to credit to spend.

Revolving debt, mostly credit cards, surged 14.5%, the fastest pace in nearly three years. It fell by 4.4% in August.

Excluding gasoline station sales, retail sales barely budged in September. Disposable personal income, adjusted for inflation, declined. Average hourly earnings have lagged inflation for seven straight months. At the same time, the savings rate declined again.

Wealth effects from the bull market have boosted spending. Markets recovered today, one day after a rout on the NASDAQ. A sustained decline in the stock market due to rethinking of the AI expansion would weigh on consumer spending and economic growth.

Nonrevolving debt - car loans, student loans and personal loans - gained 3.6%. That follows gains of 4.1% and 1.7% in August and July.

Vehicle sales edged lower but from a high volume in August. Some buyers bought ahead of new tariffs. Student loan debt continues to compound, curtailing spending for borrowers.

We expect the Federal Reserve to raise short-term rates again next month in an effort to rein in inflation.

Matthew Nestler, PhD

KPMG Senior Economist

Consumers used credit to support consumption in the third quarter. Facing declining real incomes and depleted savings, households used their credit cards. Anecdotally, lower income households are using credit to buy essentials. The steady labor market is supporting overall consumption, but inflation is taking a bite out of each paycheck. We expect the Federal Reserve to raise short-term rates again next month in an effort to rein in inflation.