US credit applications rise as households keep payment options open

US consumers sought credit at the highest rate since October 2021 in June, even as surveys showed continued caution about household finances and discretionary spending. The Federal Reserve Bank of New York said 46.1% of consumers had applied for credit in the prior 12 months, up from 44.4% in February, while rejections edged up to 16.1%.

The New York Fed’s June credit access data also showed that the denial rate remained far below the 23.1% level reported a year earlier. The figures point to continued demand for borrowing capacity, although application data do not by themselves show whether households are increasing balances or spending more.

PYMNTS Intelligence said the Fed data were consistent with its own research showing consumers have become more selective about purchases while still valuing access to cards and other payment tools. Its June Consumer Expectations Index found that its Macro and Buying Climate Subindex stayed below the neutral level of 50 throughout the year. PYMNTS said consumers have also become less upbeat since December about their current finances and their ability to manage debt.

Credit as timing flexibility

The data suggest households may be separating the decision to spend from the decision to preserve access to credit. A credit line can raise purchasing capacity, but for card users it can also shift the timing of cash outflows. Consumers who pay the statement balance in full can use that timing feature without incurring revolving interest, according to PYMNTS.

PYMNTS said card usage remains broad among millennials. In separate research, the firm found that 66% of millennials used credit cards for retail purchases in the previous 12 months, compared with 70% who used debit cards.

For in-store millennial transactions, PYMNTS said debit represented about 43% to 47% of activity, with credit cards accounting for another 25% to 27%. Digital wallet balances made up 10% to 14%, while buy now, pay later represented about 2%.

That mix indicates that consumers use different instruments for different purchases. Debit draws directly on available cash, credit can defer payment until the billing cycle closes, digital wallets can hold stored balances and BNPL can divide a purchase into installments. The relative shares reported by PYMNTS show cards, particularly debit and credit, remain central to everyday payments among millennials.

Application growth and borrowing intent

The New York Fed data also showed some restraint in consumers’ expectations for future applications. In June, consumers reported lower expectations than in February for applying over the next year for new credit cards, auto loans, higher credit card limits and mortgage refinancing, according to the central bank.

That distinction matters for interpreting the rise in applications. Application rates can shift before borrowing balances or spending levels change, making them an early signal of household intent rather than a direct measure of new debt. The next data to watch will show whether applications translate into higher revolving balances or whether consumers maintain the more measured spending behavior described by PYMNTS.

PYMNTS also cited incentives for selective card use. The firm said 67% of millennials who noticed rewards or cash-back offers tied to payment methods redeemed them, and noted that credit cards can include fraud and dispute protections.

Taken together, the New York Fed and PYMNTS findings show consumers keeping credit available while expressing caution about economic conditions and personal finances. For many households, credit access appears to function less as a signal of broad spending appetite than as a liquidity buffer and payment-management tool.

This story draws on original reporting from PYMNTS.