Remember when taking on debt felt almost painless? A few clicks, a signature, and suddenly you’re driving off the lot or paying for another semester. Lately, though, that old comfort has started to fade. The latest numbers on consumer borrowing just came in, and for the first time in a while they’re flashing something closer to caution than celebration.
October’s consumer credit increase clocked in at just over $9 billion—well below what most economists had penciled in and noticeably softer than the roller-coaster swings we’ve seen over the past couple of years. Total outstanding consumer debt now sits at a fresh record of $5.084 trillion. Yes, still growing, but barely.
A Tale of Two Very Different Debt Worlds
Dig a little deeper and the picture gets more interesting. The borrowing universe has basically split in two: the plastic-fueled world of credit cards and the “big ticket” world of cars and college.
Credit Cards: Still the Go-To Emergency Fund
Revolving credit—mostly credit cards—jumped by $5.4 billion in October. That’s the biggest monthly bump since midsummer, but honestly it’s modest compared to the wild $8–10 billion monthly surges we grew used to from 2021 through 2024.
Here’s the part that still makes my eyebrows rise: the average interest rate on credit-card accounts that actually charge interest is now 22.83%—basically kissing the all-time high of 23.37% set a year ago. The Fed has sliced 150 basis points off the fed funds rate since September, yet card rates have gone… up two basis points since the start of 2025. If that isn’t a textbook example of banks protecting margins at the consumer’s expense, I don’t know what is.
“Rate cuts for thee, but not for me.” That’s essentially what the banking system is whispering to every card-carrying American right now.
Put another way, the emergency cushion millions of households rely on just got noticeably more expensive at the exact moment wages are barely keeping pace with shelter and food inflation.
Auto and Student Loans: The Brakes Are On
Non-revolving credit—think auto loans and student debt—added a measly $3.8 billion. That’s the weakest reading since we actually saw a decline back in February. Context matters here: for years, these categories were the heavy lifters pushing total consumer credit ever higher.
Car loans in particular have been on a tear ever since the chip shortage era sent vehicle prices into the stratosphere. The average new-vehicle transaction just crossed $50,000 for the first time ever, and the average amount financed hit a record $41,000. People weren’t borrowing that kind of money because they suddenly fell in love with depreciation—they were doing it because there was no other way to get the keys.
Now, with used-car values finally softening and 7–9% auto loan rates feeling a lot less appealing than the 0–3% deals of 2021, buyers appear to be tapping the brakes. Dealership lots are fuller than they’ve been in years, and “payment fatigue” has become a real phrase you hear from finance managers.
Student loans tell a similar story of exhaustion. After the repayment pause ended, balances exploded higher as borrowers who had been on zero-percent forbearance suddenly resumed payments. Third-quarter data showed a $27 billion surge. But the October slowdown hints that new borrowing—the kind that funds graduate degrees or, let’s be honest, sometimes just lifestyle creep—may finally be cooling off.
What the Slowdown Actually Tells Us
In my experience watching these reports for years, big swings usually grab the headlines, but the quiet months often say more. When consumer credit growth drops this sharply, three things tend to be happening at once:
- Households are hitting the limits of what they’re comfortable servicing.
- Banks are tightening standards (even if they won’t admit it publicly).
- People are simply buying less stuff on time.
All three can be true simultaneously, and right now they probably are.
Delinquency rates on credit cards and auto loans have been creeping higher for six straight quarters. Serious delinquencies (90+ days) on cards are now at the highest level since 2011. That’s not panic territory yet, but it’s the kind of trend that makes risk departments nervous—and when they get nervous, credit limits stop growing and new applications get declined more often.
The Great Rate-Cut Disconnect
Perhaps the most frustrating part of this whole picture is the giant gap between what the Federal Reserve is doing and what households actually feel in their wallets.
Since September, the Fed has cut rates by a full percentage point and a half. Mortgage rates have come down—slowly and grudgingly, but they’re down. Yet the average new credit-card offer is still north of 24% for many consumers, and existing balances are repricing higher, not lower.
Banks blame “risk-based pricing” and point to those rising delinquency stats. Fair enough. But when net interest margins for the largest card issuers are still near decade highs, it’s hard not to feel that consumers are getting squeezed to protect bank earnings rather than purely to reflect risk.
Looking Ahead: Soft Landing or Slow Bleed?
The $5 trillion question—literally—is whether this slowdown in credit growth is the early sign of a healthy deleveraging or the opening act of something uglier.
On the optimistic side, if households are finally pumping the brakes on borrowing, that could actually strengthen balance sheets over time. Less debt service means more disposable income when wages eventually catch up or inflation eases further.
On the pessimistic side, consumer spending still accounts for roughly 70% of GDP. If people stop buying cars, furniture, and even smaller ticket items because financing feels too expensive, the economic “soft landing” everyone keeps talking about could get bumpier than expected.
My personal take? We’re probably in for a period of slower, more selective borrowing rather than an outright credit crunch. The labor market would need to crack significantly before we see the kind of freeze that characterized 2008–2009. But selective can still be painful—especially for younger households carrying five- and six-figure student loans alongside $10,000+ credit-card balances at 23%.
In a world of instant everything, learning to live without new debt might be the most valuable skill of the next decade.
The numbers we got this month aren’t screaming crisis. They’re whispering caution. And sometimes the whispers are what you need to listen to most carefully.
Either way, one thing feels certain: the era of borrowing like the bill will never come due is quietly drawing to a close. Whether that turns out to be a relief or a rude awakening probably depends on how much debt is sitting on your personal balance sheet right now.
