The cards that drove much of the rise in serious post-pandemic delinquency are making a smaller contribution to the overall national rate. As a result, the latest household debt figures from the Federal Reserve show fewer card balances moving into delinquency as a share of the total eligible to do so. A separate New York Fed analysis shows how much the national picture depends on when those cards were opened.
The New York Fed’s Nov. 10 household debt report shows that card balances rose $22 billion to about $1.29 trillion in the third quarter. As PYMNTS reported, the shares of card balances moving into early and serious delinquency both edged down from the prior quarter. The national figures combine balances from cards opened under different lending standards and at different points in the economic cycle.
The Fed’s companion analysis of card delinquencies separated those balances by the year the cards were issued. The median credit score at opening fell from 699 for cards issued in 2017 through 2019 to 688 for those issued in 2020 through 2022. The latter group later accounted for a sizable share of balances newly becoming at least 90 days past due. Its contribution has since diminished as those cards make up a shrinking share of surviving accounts. Researchers also found that newly opened card debt has historically been more likely to fall past due, making the credit quality of recent applicants especially relevant to what happens next.
What the New Accounts Tell Issuers
There are already signs that the mix of new lending is changing. As PYMNTS reported in October, data from the Philadelphia Fed showed that large banks opened a greater share of cards for borrowers with scores below 660 in the second quarter than a year earlier. The median initial line for that group rose from $500 to $600, compared with an unchanged $7,000 for borrowers scoring 720 or higher. The number of accounts an issuer opens and the dollars it commits to those borrowers can therefore move at different rates.
The Fed’s October loan officer survey offer some additional detail. Banks reported on balance that they were less likely to approve subprime applicants than a year earlier, with smaller banks driving that result. The Philadelphia Fed measures the share of cards actually opened at large banks for borrowers below 660. The loan officer survey asks how approval practices changed and uses a lower score threshold as its example of subprime.
Once an account is open, the amount a borrower pays each month adds another measure. In PYMNTS Intelligence’s subprime consumer profile, 45% of subprime cardholders reporting their payment behavior said they had paid more than the minimum and less than the full balance in the preceding month. Another 31% paid only the minimum, and 15% paid in full. The first two groups both met the required payment amount, yet their payments left different portions of the bill outstanding.
The October PYMNTS Consumer Expectations Index gives a more recent view of how repayment can change. Among cardholders who said they paid in full less often than a year earlier, 9.1% named interest or fees increasing their balance as the main reason. The survey captures what cardholders reported about repayment. The Fed’s records show when balances actually crossed into delinquency. The two measures describe different stages of carrying card debt.
For issuers, the comparison is between cards at the same point in their lives. Payment amounts and balances carried from month to month show how accounts opened this year are performing before serious delinquency becomes visible. Comparing those accounts with earlier groups at the same age also puts the national improvement in context. The pandemic-era contribution is fading, and the newest accounts are still building a repayment record.
