Consumers Took on 7.1% More Debt in November

Consumers’ debt grew at a seasonally adjusted rate of 7.1% in November.

The Federal Reserve reported in a Monday (Jan. 9) statistical release that revolving credit leapt at an annual rate of 16.9% during the month, while nonrevolving credit grew at an annual rate of 3.9%.

Total outstanding consumer credit totaled $4.76 trillion in November, up from $4.73 trillion the previous month, Seeking Alpha reported Monday. That total included $1.19 trillion of revolving credit and $3.57 trillion of nonrevolving credit, which were up from $1.17 trillion and $3.56 trillion, respectively, in October.

Consumer credit grew more than expected during November, with the $27.96 billion rise outpacing the $25 billion consensus forecast, according to the report.

PYMNTS research has found that households that live paycheck to paycheck may be more likely to borrow money or rely on credit to make ends meet, which can lead to debt and financial strain.

Fifty-seven percent of paycheck-to-paycheck consumers reported that high inflation has diminished their capacity to reach their long-term financial goals, according to “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS and LendingClub collaboration.

What’s more, compared to a year earlier, 42% of consumers living paycheck to paycheck with issues paying bills reported a decrease in the portion of their paycheck that they can save, compared to 32% of all consumers who said the same, the report found.

This news from the Federal Reserve comes three days after it was reported that Wall Street and banks are growing concerned about car buyers’ growing debt load.

The size of outstanding auto loans — which rose from $1.44 trillion in the third quarter of 2021 to $1.52 trillion in the same quarter of 2022, according to the Federal Reserve Bank of New York — puts both borrowers and lenders at risk.

As PYMNTS reported in December, the rise in stretched consumers has seen more banks and FinTechs looking to help them.

With weakened consumer buying power, banks and FinTechs are increasingly investing in new ways to help so-called “cusp consumers” boost their credit scores and improve overall financial wellness with the help of programs that support — and report — responsible payment behavior.