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Banks are mainly tightening new lending, adjusting existing card terms, and boosting loss reserves as delinquencies rise, while selectively investing in collections and risk analytics instead of pulling back across the board. Responses vary by segment and institution, but the direction is clearly toward more caution on riskier borrowers and portfolios.
Tightening standards and credit limits
Banks report stricter lending standards on new credit card accounts, including higher minimum credit scores, tighter limits, and less willingness to approve borrowers who fall below score cutoffs. Senior loan officer surveys show net shares of banks tightening terms such as credit limits and required minimum payments even when standards for other consumer loans are unchanged.
Many lenders are also curbing growth where stress is highest—such as lower‑income ZIP codes and younger borrowers—by reducing pre‑approved offers and pulling back on aggressive line increases. At the same time, overall demand for new credit cards has weakened, which reinforces a slower pace of portfolio expansion.
Pricing and risk‑based repricing
Riskier segments increasingly face higher pricing through elevated APRs and fees, with average card APRs at multi‑decade highs. Some issuers are using risk‑based repricing or promotional roll‑offs to better match interest income to rising loss expectations, particularly on newer vintages that have gone delinquent faster.
These pricing moves aim to compensate for higher expected charge‑offs and to encourage faster pay‑downs among revolvers, though they can also strain already stretched borrowers and contribute to further delinquency for the most fragile households.
Building reserves and managing charge‑offs
Banks and credit unions are increasing provisions for loan and lease losses as card charge‑offs remain elevated relative to the past decade, even where delinquencies have recently stabilized. Some large institutions report that loss rates and delinquencies have improved year over year, but remain above pre‑pandemic norms, prompting a cautious stance on reserve releases.
Regulators’ and central bank data show that early‑stage delinquencies serve as a 6–9‑month lead indicator for charge‑offs, so risk teams are closely monitoring transitions into serious delinquency and updating allowance models accordingly.
Operational and collections strategies
Lenders are reallocating collections capacity toward segments and regions where delinquency acceleration is most severe, adding digital outreach and data‑driven prioritization. Many institutions emphasize simpler repayment options and restructuring for stressed but still employed borrowers, aiming to reduce “roll rates” into more severe delinquency buckets.
Some banks also lean on enhanced analytics to identify at‑risk accounts earlier—using behavior, geography, and score dynamics—to intervene before borrowers hit 60‑ or 90‑day past‑due status.
Snapshot of key bank responses
| Response area | What banks are doing | Why they are doing it |
|---|---|---|
| Underwriting standards | Raising score cutoffs; tightening approval criteria and credit limits on new cards | To reduce new exposure to marginal borrowers as delinquencies rise |
| Existing account terms | Adjusting limits, minimum payments, and promotional offers, especially in high‑risk segments | To slow balance growth and improve repayment behavior on vulnerable accounts |
| Pricing and APRs | Maintaining or increasing risk‑based APRs and fees | To offset higher expected loss rates and funding costs |
| Reserves and charge‑offs | Boosting provisions; managing elevated but stabilizing charge‑off levels | To stay ahead of potential 2026 default pressure flagged by delinquency trends |
| Collections operations | Expanding outreach capacity, earlier contact, and digital tools in collections | To keep more borrowers from rolling into serious delinquency and charge‑off |
Rising delinquencies are most concentrated among lower‑income households, younger borrowers, and borrowers in higher‑cost or already‑stressed regions, with subprime and near‑prime credit tiers still carrying the heaviest burden. At the same time, delinquency rates have also risen noticeably in higher‑income ZIP codes and among middle‑aged borrowers with larger balances, so the strain is not limited only to traditional high‑risk groups.
Income and geography
Delinquency growth is steepest in the lowest‑income ZIP codes, where serious credit card delinquency has climbed above 20% and has risen faster than in affluent areas since 2021. However, high‑income ZIP codes have seen some of the largest proportional increases in delinquent balances, as previously low rates have nearly doubled from their troughs.
Geographically, delinquency rates are highest in parts of the Deep South, with states such as Mississippi, Louisiana, and Alabama showing particularly elevated shares of card balances past due. These regions combine lower average incomes, higher living‑cost pressures, and often weaker safety nets, amplifying credit stress.
Age and lifecycle
Transitions into serious credit card delinquency are highest among borrowers in their late 20s and 30s, who are juggling rent, rising living costs, and multiple forms of debt. Under‑30 borrowers show especially sharp increases in late payments as pandemic‑era supports and forbearances have fully rolled off while wages have not fully kept pace with expenses.
Middle‑aged consumers, particularly Gen X, also contribute meaningfully to the rise because they carry the largest average card balances, now approaching about five figures per borrower on average. For older borrowers, delinquency rates are generally lower, but any increase is notable given their often fixed or limited incomes.
Credit tier and account vintage
Subprime borrowers experienced the biggest run‑up in delinquencies from 2022 through late 2024, and although subprime card delinquencies have recently edged down, they remain far above prime levels. Near‑prime borrowers, along with thinner‑file consumers who gained access to credit during looser underwriting periods, also show elevated and persistent delinquency rates.
Newer credit card accounts originated in 2022–2023 have tended to go delinquent faster than pre‑pandemic vintages, indicating that recent cohorts of borrowers are more fragile. Rising aggregate card leverage—higher utilization and record total balances—has been a key predictor of these post‑pandemic delinquency increases across risk tiers.
Key segments driving the increase
| Dimension | Segments driving delinquency rise | Evidence of stress |
|---|---|---|
| Income & ZIP | Lowest‑income ZIP codes; also notable jumps in high‑income areas | Serious card delinquency in low‑income areas above 20%; delinquent balances in high‑income areas up sharply from 2022 troughs |
| Geography | Deep South states (e.g., MS, LA, AL) | Among the highest state‑level card delinquency rates in the country |
| Age | Under‑30 and 30s cohorts | Higher transitions into 90‑day‑plus delinquency as supports roll off and costs stay high |
| Credit tier | Subprime and near‑prime borrowers | Subprime delinquency peaked after a large run‑up; remains elevated vs. prime despite recent easing |
| Account vintage | Cards opened in 2022–2023 | Newer accounts enter delinquency faster than pre‑pandemic vintages, signaling weaker recent cohorts |
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