Consumer revolving debt, including credit cards, rose $7.9 billion in October

Person holding a credit card and a cell phoneImage: Person holding a credit card and a cell phone
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Americans’ total revolving debt — which includes credit cards — grew during the month of October, according to Federal Reserve data.

Total revolving debt was up $7.9 billion — an 8.8% gain from October 2018. Meanwhile, nonrevolving debt, which includes student loans and auto loans, was up 4.3% year over year.

Increasing balances on both revolving and nonrevolving debt could mean people are spending more — a net positive for the economy.

But increased spending could result in lenders shying away from approving new credit for borrowers.

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What’s the deal with consumer debt?

As the chart below shows, total U.S. revolving debt can fluctuate greatly month over month because of the nature of revolving debt, which allows consumers to get into a cycle of repeatedly borrowing and repaying — potentially increasing their balances.

While an October increase in revolving and nonrevolving debt may not lead the central bank to act, if the trend of rising U.S. debt continues, it could lead financial institutions to tighten their purse strings.

We’ve seen evidence of this already in the Fed’s recent survey of senior bank loan officers, which shows some banks are beginning to toughen their approval criteria for credit cards.

What’s next?

Changes to financial policy or lending standards aren’t necessarily imminent, but it’s inevitable that the Federal Reserve, along with financial institutions, will continue paying close attention to this data for future decision making.

To keep up with U.S. debt trends and the central bank’s response, follow the Federal Reserve meeting calendar and statement releases.

About the author: Paris Ward is a content strategist at Credit Karma, providing readers with the latest news that will aid their financial progress. She has more than a decade of experience as a writer and editor and holds a bachelor’s… Read more.