TransUnion Analysis Uncovers Surprising Truth: Inflation-Adjusted Debt Growth Much Smaller Over The Last Five Years

 As consumers grapple with rising costs and high interest rates, recent studies have revealed an increased reliance on credit products to help make ends meet. Despite the seemingly rapid growth in balances, a new analysis by TransUnion (NYSE: TRU) uncovers a more complex reality.

According to TransUnion’s newly released Q1 2025 Credit Industry Insights Report (CIIR) total consumer balances have steadily increased over recent years. Total balances in nominal dollar terms (before adjusting for inflation) across all consumer credit products rose from $14.1 trillion in Q1 2020 to $18.0 trillion in Q1 2025, approximately 28%. The cumulative Consumer Price Index increase over that same time period, as measured by the U.S. Bureau of Labor Statistics, was nearly 24%. When adjusted for inflation, total balance growth in real dollar terms is more modest, amounting to $0.5 trillion over the five-year period, an increase of closer to 3%.

The analysis also revealed that inflation-adjusted balances for consumers actually declined in real dollar terms across the majority of credit risk tiers from 2020 to 2025. This decrease was most pronounced in the prime risk tier, which saw a 14% drop in balances after adjusting for inflation. In contrast, super prime consumers experienced an 18% growth in balances over the same period. Much of the increase for super prime borrowers was attributed to higher mortgage balances. The only other risk tier to see an inflation-adjusted increase over the period was subprime at 1.9%.

“Our latest analysis reveals a picture of credit usage that goes beyond simply an increase in total balances,” said Jason Laky, executive vice president and head of financial services at TransUnion. “When we account for the recent period of higher inflation, the rise in balances suggests that consumers in most risk tiers are not over-extended. In fact, many consumers experienced significant income gains since 2019, which have enabled most borrowers to effectively manage their debt levels.”

Total Inflation-Adjusted Balances Across All Accounts Have Declined Across The Majority of Risk Tiers Since 2019

	% nominal dollar change 2020 to 2025	% real dollar change for 2020 to 2025 – inflation adjusted
Super prime	46.5%	18.2%
Prime plus	9.4%	-11.7%
Prime	7.2%	-13.5%
Near prime	11.6%	-9.9%
Subprime	26.2%	1.9%

Source: TransUnion U.S. Consumer Credit Database

“These findings challenge the idea that consumers are simply accumulating credit card debt. Instead, they highlight how balances reflect the current economic reality,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “It’s understandable that only subprime consumers have experienced an inflation-adjusted increase in real credit card average balances, as this demographic has likely felt the impact of higher costs most acutely. But for other risk tiers of borrowers, their card balance growth has been less than the rate of inflation, indicating that many consumers may have further borrowing capacity.”