U.S. consumers’ total revolving credit balances increased for the first time in five months, at least momentarily reversing a downward trend spurred by a pandemic preference to pay down debt.
Total revolving credit balances, which are primarily from credit cards, rose 10.1% in February to $974.4 billion, according to data released by the Federal Reserve on Wednesday. The first increase since September 2020 and only the second increase in a year, the jump erased nearly all of the decline in January, when many consumers used $600-per-person stimulus checks to pay debt down to its lowest level in nearly four years.
Credit card balances are still lower than they’ve been since mid-2017, though, down $123.1 billion from their all-time high in February 2020. Revolving credit will continue to increase in the coming months, Moody’s Analytics associate economist Evan Karson said in a commentary, as the economy adds more jobs and consumer confidence improves.
The commentary did not address the likelihood of another dip in the coming months, which could result from the round of stimulus checks the government sent out in March. Those payments were much larger but went out to fewer people.
Overall consumer credit rose $27.6 billion from January, to $4.2 trillion, even with where it stood before the pandemic. It was far more than the $5 billion increase economists expected, according to an estimate cited by Moody’s Analytics. Meanwhile, non-revolving credit (such as car loans, personal loans, and student loans, but not mortgages) increased at an annual rate of 7.3% to $3.23 trillion in February.