More than one in every eight credit card accounts at the nation’s largest banks is now at least 90 days past due. That is not a projection or a warning. It is the current reading from the Federal Reserve Bank of Philadelphia’s tracking series, which pegs the delinquency rate at 13.1% as of early 2025. The last time the number was this high, Lehman Brothers had just collapsed and the U.S. economy was hemorrhaging 700,000 jobs a month.
But here is the twist: in the first quarter of 2025, Americans actually reduced their total credit card debt by roughly $25 billion, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit (Q1 2025). Rising delinquencies and falling balances at the same time point to something more complicated than a single narrative about overspending. Two very different consumer realities are unfolding side by side.
A delinquency rate not seen since the Great Recession
The Philadelphia Fed’s measure counts individual credit card accounts, not dollar amounts, that have gone 90 or more days without a payment. That distinction is important. Balance-weighted delinquency rates, like those reported by Equifax and other credit bureaus, tend to look lower because wealthier cardholders carry bigger balances and are far more likely to stay current. The accounts-based rate captures how many people are in trouble, not just how many dollars are at risk.
By that measure, the breadth of distress is wider than at any point since 2009. The 13.1% reading has blown past every level recorded during the slow post-crisis recovery, the long pre-pandemic expansion, and the brief pandemic-era dip when stimulus payments and federal forbearance programs kept most accounts current. The climb has been relentless: the FRED series shows the rate crossing 10% in the fourth quarter of 2023, and it has not reversed since.
Balances fell, but not for everyone
The $25 billion decline in total card balances suggests that a large number of households are actively paying down debt. Seasonal patterns explain part of it. Consumers routinely cut card spending in the first quarter after the holiday surge. But the size of the drop also points to a pullback among higher-income cardholders who have the cash flow to retire balances when they want to.
Lower-income borrowers are not getting the same relief. Accounts cycling past 90 days are heavily concentrated among cardholders with subprime and near-prime credit scores, a pattern consistent with the Federal Reserve Bank of New York’s Consumer Credit Panel data on credit access and financial fragility. The math is straightforward: aggregate balances can shrink even as the number of people in serious trouble grows. That is exactly what the data shows as of spring 2025. The average looks manageable. The distribution does not.
Tariffs, inflation, and the squeeze on household budgets
The delinquency spike is not happening in a vacuum. Through the first half of 2025, a new round of U.S. tariffs on imported goods has kept consumer prices elevated on categories ranging from electronics to household staples. For borrowers already stretched thin, even modest price increases on everyday purchases can be the difference between making a minimum payment and missing one. The Federal Reserve has held interest rates at restrictive levels in response to persistent inflation, which means credit card APRs remain near record highs. That combination of sticky prices and expensive revolving debt compresses cash flow from both sides, particularly for lower-income households that spend a larger share of income on goods affected by tariffs.
How lenders are responding
Banks are not standing still as delinquencies climb. Several of the largest card issuers, including Capital One and Discover, noted on their most recent earnings calls that they have tightened underwriting criteria for new applicants with subprime and near-prime credit profiles. Synchrony Financial told investors in its Q1 2025 earnings presentation that it had reduced credit line increases for higher-risk segments. At the same time, some issuers have expanded internal hardship programs, offering temporary interest rate reductions or extended payment plans to borrowers who contact them before accounts reach charge-off status. Mark Narron, a senior director at Fitch Ratings, told reporters in May 2025 that “lenders are pulling back on the riskiest originations while trying to work with existing borrowers who are showing early signs of stress.” The dual approach reflects an industry trying to limit future losses without triggering a credit crunch that would hurt spending further.
Student loan collections add another layer of uncertainty
Layered on top of credit card stress is an unresolved question about student loans. The U.S. Department of Education delayed involuntary collections on defaulted student loans while it overhauls repayment systems. Federal Reserve Bank of New York researchers have flagged student loan policy shifts as a meaningful backdrop for understanding household credit stress, particularly the risk of spillovers into credit card and auto loan performance.
No study has isolated how much of the current delinquency increase traces directly to student loan dynamics. But for borrowers juggling multiple obligations, the uncertainty itself is a pressure point. Not knowing when collections will resume, or what monthly payments will look like, makes it harder to plan and easier to fall behind on other bills.
What the data does not yet show
Several critical questions remain open as of June 2025. The Philadelphia Fed’s series does not break down delinquencies by geography, income bracket, or lender size beyond the broad “large bank” category. That leaves it unclear whether the stress is concentrated in specific metro areas, spread evenly across the country, or driven by a handful of large portfolios with aggressive lending practices.
Charge-off rates would add crucial context. Banks report charge-offs when they write balances off as uncollectible, and the relationship between delinquencies and charge-offs tells you whether lenders expect troubled accounts to eventually recover or whether they are bracing for permanent losses. A rising delinquency rate paired with stable charge-offs suggests many of these accounts may cure. Rising delinquencies paired with climbing charge-offs signals something more serious. Major bank earnings reports and the Fed’s quarterly data releases over the coming months will fill in that picture.
Whether 13.1% is a peak or just a waypoint is also unknown. Unemployment has remained low through early 2025, according to Bureau of Labor Statistics data, and that puts a natural ceiling on how far delinquencies can climb. A meaningful rise in job losses would change the math fast.
Two economies in one delinquency rate
National averages can obscure individual risk. A household with stable income and a shrinking card balance is living in a fundamentally different economy than one juggling three past-due accounts while waiting to learn whether student loan collections will restart. The 13.1% figure does not describe every cardholder. It describes a meaningful slice of American borrowers under real financial pressure, squeezed simultaneously by high APRs, tariff-driven price increases, and stagnant wage growth at the lower end of the income spectrum.
The last time credit card delinquencies were this high, the economy was in the middle of its worst downturn in 70 years. That does not guarantee a repeat. But the data as of mid-2025 makes clear that for millions of households, the downturn in their personal finances is already well underway.
