April’s 7% Jump in Revolving Credit Highlights Cards’ Role as Consumer Safety Net

Consumer revolving credit, which includes credit cards, grew at an annual rate of 7% in April — the highest rate recorded in 2025 — as consumers turned to credit to pay for goods and services ahead of tariffs going into effect the same month.

The Federal Reserve’s latest consumer credit data may offer credit card issuers insights they can use to project how consumers will use credit cards when rare events such as tariff announcements occur.

For comparison, nonrevolving credit, which includes student loans, motor vehicles, and vacations, only increased at an annual rate of 3.3% in April. The annual rate increase for revolving credit in the first quarter of 2025 was just 2.7%.

Economic conditions may have played a part in shaping consumer purchasing practices in April. President Donald Trump announced numerous new tariffs on April 2. 

Consumers, fearing that the tariffs would cause prices to increase on certain goods and thereby decrease their purchasing power, may have stockpiled items in April so they wouldn’t have to buy them after potential price increases took effect.

In April, nonrevolving credit grew at an annual rate of 3.3%.

The tariffs had a negative and immediate effect on the stock market. The S&P 500 shed nearly $2 trillion in value on the trading day following Trump’s tariff announcement. But, in a matter of weeks, the index had regained those losses as the administration clarified and delayed some of the previously announced tariffs.

Some reports say that the effects of the tariffs are difficult to predict. Ernie Tedeschi, Director of Economics for Yale University’s Budget Lab, noted in a recent report that it can take time for newly announced tariffs to cause prices to rise.

Recent findings from the nonprofit group the Tax Foundation reveal that imposed tariffs would “amount to an average tax increase per U.S. household of $1,183 in 2025 and $1,445 in 2026.”

Faced with the prospect of diminished purchasing power, some economic experts may have expected consumers to ramp up their savings levels in preparation for the day that tariff-induced price escalations would occur. But the data from the Fed suggests many consumers followed a different strategy.

The increased use of revolving credit in April likely led to higher profits for credit card issuers that collect fees from card transactions and interest income on revolving balances.

But issuers who saw their cards performing better than expected in April should examine the reasons behind the boosted card activity.

They should also prepare for the possibility that cardholders may spend less in the future than they would have without April’s tariff news because it motivated them to make some purchases before they otherwise would have.

More tariff news may be on the way over the summer. We’ll be watching future developments in that space to decipher potential impacts to the credit card industry.