The State of the Consumer: Turning Holiday Trends Into Smarter Lending

Consumers can feel uneasy about the economy and still fill shopping carts, finance vehicles and make their payments. That tension defines the opportunity for credit unions heading into the 2026 holiday season: demand remains, but household financial cushions deserve closer attention.

The question is not simply whether consumers will keep spending. It is how your credit union can meet borrowing needs without mistaking continued spending for unlimited repayment capacity. The answer starts with connecting economic signals to member behavior and translating those insights into disciplined lending and earlier support.

Read Beyond Consumer Confidence

Inflation may slow without reversing the higher prices households already face. Groceries, insurance, housing and transportation continue to compete with loan payments for the same paycheck, but anxiety does not necessarily translate into less borrowing.

The Bureau of Economic Analysis reported that August 2026 consumer spending rose 0.9 percent, while disposable income increased 0.3 percent and the personal saving rate stood at 4.1 percent. Those figures suggest spending strength should be considered alongside households’ ability to rebuild reserves.

Employment remains another critical support. September payrolls increased by 29,000, with unemployment at 4.2 percent, according to the Bureau of Labor Statistics’ September 2026 Employment Situation report. For lenders, the takeaway is to watch income continuity and account trends, not sentiment alone. A member making payments today may have less room to absorb tomorrow’s unexpected expense.

Make Holiday Lending About Value

In its 2026 holiday forecast, Deloitte projects retail sales growth of 4.0–4.8 percent for November 2026 through January 2027. Adobe’s 2026 holiday outlook separately projects 6.7 percent growth in online spending during November and December. Both forecasts point toward continued demand as consumers use promotions, comparison shopping and digital tools to stretch their budgets.

For credit unions, value should mean more than access to additional credit. Lead with transparent costs, manageable payments and clear repayment expectations. Bring relevant offers forward in the coming weeks rather than waiting until December. As buy now, pay later remains part of the shopping experience, discuss members’ total obligations instead of viewing each loan in isolation.

Credit Cards: Look for Need, Then Watch for Change

The New York Fed’s Quarterly Report on Household Debt and Credit reported $1.26 trillion in credit card balances in the second quarter of 2026. While transitions into early card delinquency were largely steady, this combination supports a measured approach rather than either indiscriminate expansion or a blanket retreat.

Higher limits alone do not guarantee growth. It’s important to evaluate demonstrated borrowing needs and repayment capacity within your credit policy. Consider qualified borrowers beyond the highest credit tiers, with pricing and monitoring aligned to risk.

Establish baselines for utilization, payment patterns and share balances. A member whose utilization jumps from 30 percent to 80 percent warrants attention, especially alongside declining deposits. Treat the change as a reason to understand the situation and offer support—not proof of impending default.

Auto Loans: Protect Affordability Beyond the Payment

Auto lending offers another opportunity, but a manageable monthly payment does not automatically make a loan sustainable. Longer terms and financing above vehicle value can leave members carrying negative equity and expose your credit union to greater risk.

To mitigate this, work cooperatively with members to evaluate terms, loan-to-value and repayment capacity. Explore affordable used vehicles, including suitable off-lease electric vehicles, without assuming today’s collateral values will persist. Growth should come from finding sound lending relationships, not stretching every transaction until the payment fits.

The same New York Fed report showed a slight increase in transitions into early auto delinquency. Compare your own performance with seasonal patterns and investigate outliers before they become broader problems.

Personal Loans: Prepare for the Post-Holiday Reset

Debt consolidation can help members turn revolving balances into a defined repayment plan after holiday spending. Prepare first-quarter outreach now, but distinguish meaningful relief from simply moving debt. Assist your members by reviewing their total obligations, payment affordability and whether the proposed structure addresses the members’ underlying cash-flow pressure. Explain total borrowing costs and pair financing with budget support. Unsecured lending leaves less protection against loss, consistent underwriting, risk-appropriate pricing and close performance monitoring remain essential.

Mortgages: Stay Ready Without Weakening Standards

Freddie Mac’s Primary Mortgage Market Survey reported a 7.28 percent average 30-year fixed mortgage rate on October 1, 2026, illustrating the affordability challenge facing buyers. Adjustable-rate mortgages may offer alternatives for suitable borrowers, but members need clear explanations of future payment changes. Create that clarity by maintaining sound equity and repayment requirements rather than weakening standards solely to generate volume. Meanwhile, keep application processes ready to respond if rates ease and demand returns.

Turn Insight Into Earlier Action

The strongest response to mixed consumer signals is neither aggressive expansion nor automatic retrenchment.

It is deliberate growth supported by behavior-based monitoring and timely member conversations. Align lending and collections teams before the holiday balances arrive, and use changes in utilization, deposits and payment habits to guide outreach.

The goal is simple: connect the right lending opportunity with a repayment plan members can sustain.

Joshua Faith is the lending services and treasury director for Vizo Financial. His role involves the overall management of the investment portfolio credit and lending services operations. He oversees all operations, analysis, reporting, regulatory and policy needs, staffing, new initiatives and vendor client relationships within these areas, as well as serves as the business lending arm for Vizo Financial's member lending operations.