U.S. consumer credit rises in August, consistent with continued stable gains in revolving credit

U.S. consumer credit in August increased USD 25.2 billion. Rises in both revolving and non-revolving credit stimulated the rise in U.S. consumer credit in the month. However, the divergent trend between the two components continues to be there despite the increases.

Revolving credit accounts for around 26 percent of the total consumer credit. It increased by USD 5.6 billion in August. On an annual basis, growth in revolving credit is accelerating at the most rapid pace since early 2008. It is being underpinned by a strong U.S. consumer. Meanwhile, on the non-revolving front, credit rose by USD 20.2 billion, the biggest rise since September 2015. However, the trend has been a gradual slowdown in recent months, said Wells Fargo in a research note.

The August release also had data on the terms of credit offered by commercial banks. The rate of interest on a 48-month new car loan dropped a bit to 4.25 percent in the third quarter. Rates of interest on credit cards have increased a bit in the past year. Overall, this release is in line with continued stable gains in revolving credit, with non-revolving credit moderating as student and auto loan growth decelerates gradually, stated Wells Fargo.