Consumer credit growth slowed in January but remained firmly positive, extending a trend that has been in place for nearly a year.
In a nutshell, households continue to rely on credit to support spending. And as consumers wield theit cards in full force, the battle for loyalty in the premium card space is heating up.
Data released Friday by the Federal Reserve show that total consumer credit increased at a seasonally adjusted annual rate of 1.9%, a deceleration from December’s pace but still part of a steady expansion in borrowing.
Revolving credit, which includes credit card balances, rose at a 4.3% annual rate during the month, down from the prior month’s surge but continuing to grow. Nonrevolving credit expanded more modestly, increasing at a 1.1% rate.
Quarterly averages point to a broader pattern of stability. Consumer credit increased at an average monthly rate of 2.8% in the fourth quarter of 2025, following gains of 2.2% in the third quarter and 2.8% in the second quarter. The result is a picture of sustained credit expansion, though at a moderating pace.
Separate PYMNTS coverage has indicated that the broader economic backdrop shows consumers still spending, though with a degree of caution. The Federal Reserve’s Beige Book indicates that retail activity rose modestly in several districts while shoppers have become more selective in their purchases, suggesting that households remain active and deliberate in how they deploy credit.
That deliberation is becoming increasingly visible in how consumers choose which cards to use.
Premium Cards Multiply
The competitive landscape for credit cards has grown increasingly crowded at the top end of the market. Premium cards (for both consumers and for businesses) with annual fees often exceeding $600 have become a central battleground for issuers seeking affluent or aspirational customers.
Established products from American Express, Chase and Capital One have long anchored this segment, but new entrants are joining the contest. Financial platforms including Robinhood and digital banks such as Revolut are pushing further into premium territory, offering cards that promise travel benefits, lifestyle perks and integrated financial tools.
The economics of this market depend heavily on engagement. Premium cards command substantial annual fees, but the issuers rely on cardholders using the products frequently enough to justify those costs.
Research from PYMNTS Intelligence shows that premium cardholders are among the most active users of credit cards. Just 3.9% report rarely or never using their high-fee card, making them the most loyal segment in the credit card ecosystem.
The data also reveal how central rewards and merchant offers have become. Nearly three in four premium cardholders used at least one card-linked offer during the past year, underscoring the role of rewards programs in keeping these cards top of wallet.
How Consumers Actually Use Premium Cards
The usage patterns behind these cards illustrate a broader shift in consumer behavior.
Premium cards represent a minority of the cards in circulation, yet they are used disproportionately often. More than half of premium cardholders report using those cards as their primary payment method.
Consumers are also increasingly strategic in how they deploy credit. PYMNTS Intelligence research shows that roughly one in four cardholders rotate among multiple cards to maximize rewards tied to specific spending categories.
From Acquisition to Churn
As the premium segment expands, issuers may soon face a different competitive dynamic.
For years, the emphasis has been on acquiring new premium cardholders through sign-up bonuses, travel perks and elevated rewards. Yet the proliferation of high-fee cards means that consumers must decide how many they are willing to carry.
With annual fees approaching $700 for some cards, maintaining several premium products could cost a cardholder thousands of dollars each year. The next phase of competition may center less on acquisition and more on retention.
Millennials have played a central role in the expansion of premium cards, particularly those oriented toward travel and experience-based rewards. If consumers begin trimming their wallets as fees accumulate, issuers that targeted younger, experience-focused demographics may face the greatest exposure.
Loyalty programs, merchant partnerships and card-linked offers ultimately will determine which cards remain in circulation…and which ones quietly disappear from consumers’ wallets.
