Late last year there was a surge in borrowing as rising prices hit consumers hard.
New personal loans increased 24% in the third quarter of 2025 compared to a year ago, driven by borrowers with the lowest credit scores, while new credit card accounts increased 11.7%, with strong growth from both subprime and subprime consumers, according to new data released Thursday by TransUnion.
“People are turning to credit as we continue to see persistently high inflation,” Michele Raneri, vice president and head of U.S. research and consulting at TransUnion, told Yahoo Finance.
Although inflation now appears to be cooling, prices have risen significantly from pre-pandemic levels — about 26% higher last month than in January 2020. Average hourly earnings have risen in turn, but consumer confidence last year was sharply negative as Americans felt hurt by rising costs and a stagnant labor market.
“Just because the inflation figure has come down during this quarter doesn’t mean it hasn’t built up,” Raneri said.
Read more: How to protect your savings against inflation
As more Americans seek lines of credit to cope, a growing number are falling behind on payments. The Federal Reserve Bank of New York’s most recent report on household debt found that 12.7% of credit card balances were 90 days or more past due in the fourth quarter of 2025, the highest level since 2011.
Meanwhile, TransUnion found that credit card balances grew 4.2% at the end of last year, a growth rate that held for the fourth consecutive quarter.
Personal loan balances, despite being at a record level of $276 billion, remain more or less stable, at around $8,400, compared to 2024 levels when all accounts are averaged.
Going forward, credit card origination volumes (people seeking new accounts) are expected to moderate in 2026, according to TransUnion’s forecast.
“Our expectation is that everything is calming down,” Raneri said.
Emma Ockerman is a reporter who covers economics and labor for Yahoo Finance. You can contact her at emma.ockerman@yahooinc.com.
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