U.S. consumer borrowing jumps by $27.8 billion in September, biggest gain in nearly four years

What the data show

Federal Reserve figures released Friday put September's increase in total consumer credit at $27.8 billion, the largest monthly gain in nearly four years and stronger than all projections in a Bloomberg poll. The tally excludes home mortgages.

Revolving credit led the move, with credit card and similar balances up $16.3 billion, the biggest jump since November 2023. Nonrevolving credit rose $11.5 billion, closing out the fastest three month stretch for that category since 2022.

Why people are borrowing more

Americans have kept spending brisk even with everyday prices still elevated, helping support growth. The numbers point to heavier credit card use as pay raises lag inflation, and many economists expect spending to cool in the year's final months.

Elevated borrowing rates are one reason households feel pinched. The 10 year Treasury yield surged in September, mortgage rates moved higher, and Friday's report showed credit card rates climbed in the third quarter.

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Politics on the ledger

Debt strains are showing up at the ballot box. Voters cited borrowing costs as a motivator this week, including David Tapley, 29, a resident of Pennsylvania's 7th Congressional District; that district just shifted to Democrats by a wide margin. He said he has accumulated more than $5,000 in credit card debt over the past two years.

"Interest rates are super high and only going up," Tapley said. "It's easy to accumulate credit card debt when you don't have the income to afford necessities."

What it means for your portfolio

In plain English: more spending is being financed, and the cost of that financing is rising. That backdrop puts consumer credit quality and rate sensitive corners of the market under a brighter spotlight, while consensus points to softer household outlays later this year.

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