Credit Card and Auto Loan Rates Drop for the First Time in Years

Total outstanding US consumer debt stood at $5.08 trillion for the first quarter of 2024, increasing at an annualized rate of 2.46% (seasonally adjusted), according to the Federal Reserve’s G.19 Consumer Credit Report. From the second quarter of 2023 to the second quarter of 2024, the total increased by 1.84%. This year-over-year (YoY) growth rate is the lowest observed since the first quarter of 2021.

Nonrevolving and Revolving Debt

Of the total outstanding US debt in the first quarter of 2024, the nonrevolving share is 74%, with revolving at 26%. Nonrevolving debt (primarily student and auto loans) stands at $3.73 trillion (SA) for the second quarter of 2024. Revolving debt (mainly credit card debt) stands at $1.34 trillion.

The pace of growth has slowed for both nonrevolving and revolving debt as households’ pandemic-era savings have dwindled. In terms of YoY growth, both nonrevolving and revolving debt peaked in the fourth quarter of 2022 at 15.10% and 5.34% respectively. In the second quarter of 2024, the YoY growth rate for nonrevolving debt decreased to 6.12%, from 7.99% in the first quarter, while the growth rate for revolving debt increased from 0.14% to 0.39%. This was the sixth consecutive quarterly decline in YoY growth for nonrevolving debt while revolving debt saw its first uptick in the YoY rate in five quarters.

Student and Auto Loans

Breaking down the components of nonrevolving debt, student loans account for 47%, and auto loans make up 42% (the G.19 report excludes real estate loans). Collectively, the other loans make up the remaining 11% of nonrevolving debt.

Student loans in the second quarter of 2024 totaled $1.74 trillion (non-seasonally adjusted), marking the fourth consecutive decrease in the YoY rate at -0.96%, following an annual decrease of -1.22% in the previous quarter. The third quarter of 2023 marked the first YoY decrease for student loan debt since the data was first reported.

Auto loan debt for the second quarter of 2024 was $1.57 trillion (NSA). Auto loan YoY growth has steadily decelerated over the past six quarters. The fourth quarter of 2021 saw a high of 13.74% YoY growth compared to the second quarter of 2024 YoY growth rate of 1.95%. This slowdown partially reflects the relatively high interest rate on auto loans, which have increased from 4.52% in Q1 2022 to 8.20% in Q2 2024 (60-month new car loans). However, this car loan rate experienced its first (albeit slight) decline in over two years, falling from 8.22% in the previous quarter.

Credit Cards

The interest rate on credit cards saw its first decrease since the fourth quarter of 2021.  The interest rate for the second quarter of 2024 was 21.51%, falling from 21.59% in the previous quarter. Before this quarter, the rate experienced nine consecutive quarterly increases, with a dramatic increase of 2.8 percentage points from Q3 2022 to Q4 2022. This aligns closely with the Federal Funds Effective Rate increasing 1.47 percentage points during the same period, the highest increase since the 1980s.