New Report Finds Consumer Credit Usage Surged in April

The most recent consumer credit data from the Federal Reserve indicated that consumers turned to credit to pay for goods and services at a significantly elevated rate in April. The aggregate tally of consumer credit surged by $17.9 billion, exceeding consensus estimates of a $11.4 billion gain. These findings indicate that consumers increased purchases as tariffs took effect the same month. 

The Fed’s G19 report found that the annualized gain came in at 4.3 percent, the highest rate since the start of the year, as outstanding balances reached $5.01 trillion. PYMNTS noted that April’s increases were largely driven by a 7 percent spike in revolving credit, which is the highest increase since the beginning of the year. Non-revolving credit grew at an annualized rate of 3.3 percent last month. 

Depository institutions kept their position as the largest holders of consumer credit, accounting for 1.9 trillion, followed by the federal government at $1.5 trillion. Credit unions account for $648 billion of the outstanding credit, $84.6 billion of which accounts for revolving credit, which includes but is not limited to credit card balances. 

Other data from the Fed indicates that spending may have started to slow down; the Fed’s Beige Book, which spans 12 reporting districts across the nation, showed that spending was mixed, though most districts reported either no changes or slight declines. However, consumer spending was less uniform, with four districts reporting improvements and five reporting worsening conditions. 

35 percent of consumers used credit cards for a recent impulse purchase and roughly a third of consumers used credit cards to cover emergency expenses. 36 percent of consumers splurged on an impulse buy of at least $250, while 35 percent made an emergency purchase of the same amount in the last year.