Consumer Borrowing Slows in January After Holiday Surge

Slowing debt growth signals continued consumer stress as Americans reach credit limits

Mar. 15, 2026 at 3:30pm

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After a surge in consumer borrowing over the 2025 holiday season, the pace of new debt growth slowed considerably in January, according to the latest Federal Reserve data. Consumer debt grew by just $8.1 billion in January, a 1.9% annual increase, as Americans appear to have reached the limits of their credit cards. This slowdown in borrowing follows a 11.3% jump in December revolving credit balances as consumers used credit cards to pay for holiday spending.

Why it matters

The slowing growth of consumer debt is a concerning sign for the economy, which has become heavily reliant on consumer spending fueled by credit. As Americans hit their credit limits, it could have major implications for economic growth going forward. High levels of debt are already stressing many households, especially those with lower incomes.

The details

Consumer debt, which includes credit cards, student loans, and auto loans but excludes mortgages, now stands at a record $5.11 trillion. When mortgages are included, U.S. households are buried under $18.8 trillion in total debt. The modest 1.9% increase in January consumer debt follows a 2.4% average growth rate for all of 2025. Revolving credit, primarily credit card debt, grew by just 4.3% in January after spiking 11.3% in December. Non-revolving debt, like auto and student loans, also saw a sharp slowdown in growth in January.

  • Consumer debt grew by $8.1 billion in January 2026.
  • Revolving credit balances, reflecting credit card debt, grew by 11.3% in December 2025.
  • Revolving credit balances grew by just 4.3% in January 2026.

The players

Federal Reserve

The central banking system of the United States that collects data on consumer debt levels.

KPMG

A global professional services firm that reported on the slowing growth of revolving credit and its impact on the bottom 80% of U.S. households.

LegalShield

A company that publishes the Consumer Stress Legal Index, which showed a 10.4% increase in consumer stress in 2025.

New York Fed

The Federal Reserve Bank of New York, which reported that aggregate delinquencies on debt worsened in the fourth quarter of 2025.

VantageScore

A credit scoring model that reported a 47% year-over-year increase in late payments by people in the prime credit segment in Q3 2025.

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What’s next

The Federal Reserve will continue to monitor consumer debt levels and delinquency rates as an indicator of economic health. Policymakers will likely watch closely to see if the slowdown in borrowing continues, which could signal a broader pullback in consumer spending.

The takeaway

The slowdown in consumer borrowing, especially among lower-income households, is a concerning sign for an economy heavily reliant on consumer spending. As Americans reach their credit limits, it raises questions about the sustainability of an economy fueled by debt rather than organic growth.