Consumer Credit Cooled in May; Plus, a Look at How CUs Performed

 ARLINGTON, Va.—Total consumer credit rose 5.9%, at a seasonally adjusted, annualized rate in May and is up 7.3% compared to a year ago.

Curt Long

Revolving credit - primarily credit cards - rose 8.1% this month and is up 13.4% compared to May 2021. Non-revolving credit – primarily auto loans and education loans – rose 5.2% this month and is up 5.5% from a year ago, NAFCU reported.

“Consumer credit growth cooled in May to 5.9%…That is well below the pace set in the prior three months, which averaged over 10%,” said NAFCU Chief Economist and Vice President of Research Curt Long. "A lack of auto inventory is clearly impacting growth in the non-revolving sector. Revolving debt has been stronger and has now surpassed the February 2020 debt level. Still, revolving balances are roughly 6% below where they would be had pre-COVID trends held.”

Trend at CUs

Total consumer credit for credit unions rose 1.9%, on a seasonally adjusted basis, in May, compared to a 1.2% gain for banks and 0.3% increase for financial companies. From a year prior, total consumer credit at credit unions rose 11%, while banks experienced a 12.3% gain and financial companies rose 1.6%.

Increase in Share

Over the past 12 months, credit unions’ share of the market rose 0.4 percentage points to 12.5%. Banks’ share rose by 1.8%age points to 41.4%, and financial companies' share fell by 0.4 percentage points to 12.5%, NAFCU stated.

“Household balance sheets are still in good condition overall and consumers have more borrowing capacity,” noted Long. "With inflation as high as it is, NAFCU expects to see revolving balances grow quickly through the rest of the year as household balance sheets align more closely with pre-COVID positions."