The end of last year saw a significant increase in borrowing as consumers struggled with rising prices. According to new data from TransUnion, personal loans surged by 24% in the third quarter of 2025 compared to the previous year, particularly among borrowers with low credit scores. Additionally, new credit card accounts rose by 11.7%, with growth seen across both subprime and superprime consumers.
Michele Raneri, vice president and head of US research and consulting at TransUnion, attributed this trend to the ongoing high inflation rates. While inflation may be showing signs of cooling, prices remain significantly higher than pre-pandemic levels, with a 26% increase last month compared to January 2020. Despite a rise in average hourly earnings, consumer sentiment has been negative due to escalating costs and a stagnant job market.
As more Americans turn to credit to manage expenses, an increasing number are struggling to make timely payments. The Federal Reserve Bank of New York reported that 12.7% of credit card balances were 90 days or more overdue in the fourth quarter of 2025, the highest level since 2011. Meanwhile, TransUnion noted a 4.2% increase in credit card balances at the end of last year, marking the fourth consecutive quarter of growth.
Despite personal loan balances reaching a record high of $276 billion, the average balance has remained relatively flat at around $8,400 compared to 2024 levels. Looking ahead, TransUnion forecasts a moderation in credit card origination volumes in 2026, suggesting a stabilization in consumer borrowing habits.
Raneri emphasized the importance of monitoring the situation closely, stating, “Our anticipation is that everything is kind of settling down.” As the economy continues to navigate through these challenging times, it is essential for individuals to stay informed and make informed financial decisions.
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