Consumer Credit Moderates as Unsecured Performance Strengthens

dv01’s January 2026 Consumer Unsecured report pairs a moderating macro credit backdrop with continued strength in loan-level performance. Federal Reserve data shows slowing consumer credit growth, while the unsecured personal loan sector continues to outperform seasonal expectations.

What the Data Shows: Slowing Credit Growth, Strengthening Performance

• Credit growth continues to decelerate: Q4-2025 credit card balances grew 5.5% YoY — the second slowest pace since 2019. Adjusted for inflation and household formation, ex-mortgage credit remains ~10% below pre-COVID levels.

• Younger households are still deleveraging: Age 18–29 households have now seen seven consecutive quarters of nominal debt decline. The 30–39 cohort is showing similar trends, reinforcing a structural shift in younger borrower behavior.

• Consumer Unsecured impairments improved beyond seasonality: 30+ Impairments fell 12 bps MoM — materially better than seasonal norms — despite January typically being one of the strongest credit months of the year.

• Net credit trends remain historically strong: Impairment Net Charge-Off declined to 0.53%, extending one of the longest YoY improvement streaks in sector history and now running below January 2019 levels.

What We’re Watching: Macro Signals and Vintage Dispersion

• Will seasonal credit card growth reverse? Q4’s balance growth was largely seasonal. A typical Q1 decline would reinforce the deleveraging narrative; sustained growth would suggest shifting consumer behavior.

• Credit concentration among older cohorts: Households aged 40–69 continue to drive credit card growth, while younger cohorts carry less debt per household. Watching whether this age divergence persists into 2026.

• Loan age stabilization: The largest impairment improvement came from the 3–6 month and 6–12 month buckets — segments that drove much of the 2024 deterioration narrative. Early-stage performance has now improved for a second consecutive month.

• 2024-Q4 vintage seasoning: The 2024-Q4 vintage is trending ahead of 2023-H2 impairment pace and lacks the typical Q1 seasonal benefit due to timing. Charge-offs remain contained, though seasoning through Q2 will be critical.