US consumer credit fell $182M in May, the first monthly decline since November 2024, driven by a sharp $5.3B drop in revolving credit as credit card rates hit 22.15%.
Macro & Markets ·
US consumer credit contracted by $182 million in May, marking the first monthly decline since November 2024 and falling sharply below expectations of a $17.5 billion increase. The pullback was driven by revolving credit—primarily credit cards—which dropped $5.3 billion, the second-largest monthly decline since November 2020. This reversal followed consecutive gains of $11.5 billion and $10.7 billion in the prior two months.
Non-revolving credit, encompassing auto and student loans, expanded by $5.1 billion, though this represented the smallest monthly increase since February. Concurrent with the credit contraction, the average interest rate on credit cards reached 22.15%, approaching record highs and potentially constraining borrower appetite for new debt.
The simultaneous tightening of credit demand and expansion of borrowing costs raises questions about consumer debt sustainability, though whether this signals a structural shift in credit behavior or a temporary pullback remains unclear. The data offers limited visibility into whether households are deliberately deleveraging, facing reduced lending availability, or responding to rate pressures.