Revolving credit balances in the U.S. jumped in May, suggesting that the pandemic aversion to using credit may be ending as the economy continues to recover.
Consisting mostly of credit card debt, revolving credit balances grew at an annual rate of 11.4%, the largest month-to-month gain since December 2019, according to the Federal Reserve’s latest consumer credit report, released Thursday. May’s increase of $9.2 billion—the third gain in four months—brings balances to $974.6 billion. That’s the highest level in six months, but still well below the pre-pandemic peak of $1.1 trillion.
Consumers—focused on their financial health with fewer opportunities to spend—moved away from revolving credit during the worst of the pandemic. Even with May’s increase, the level of revolving credit is still $122.9 billion lower than the record high, reached in February 2020. Economists have expected this gap to close and revolving balances to grow this year as restrictions are lifted and consumers venture out to spend money on things like vacations.
Non-revolving credit balances—which include car, personal, and student loans—also increased in May, climbing at an annual rate of 9.5% to $3.3 trillion.
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