{"id":1024268,"date":"2026-08-26T01:19:25","date_gmt":"2026-08-26T01:19:25","guid":{"rendered":"https:\/\/www.europesays.com\/us\/1024268\/"},"modified":"2026-08-26T01:19:25","modified_gmt":"2026-08-26T01:19:25","slug":"credit-card-delinquencies-payment-volume-balances-debt-to-income-credit-limits-in-q2-2026-americans-and-their-plastic","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/1024268\/","title":{"rendered":"Credit Card Delinquencies, Payment Volume, Balances, Debt-to-Income, Credit Limits in Q2 2026: Americans and their Plastic"},"content":{"rendered":"

\t\t Credit cards are $4.3 trillion away from being \u201ctapped out.\u201d<\/strong>
\nBy\u00a0Wolf Richter<\/a>\u00a0for\u00a0WOLF STREET<\/a>.<\/p>\n

The 30-plus days delinquency rate on credit cards issued by all commercial banks declined to 2.85% in Q2, seasonally adjusted, the lowest since Q2 2023, down from 3.04% a year ago, and from 3.22% two years ago, according to Federal Reserve data released today, based on regulatory reports filed by all commercial banks (red in the chart).<\/p>\n

The 60-plus days delinquency rate by all credit cards, including private label credit cards (such as store cards), and subprime credit cards, declined to 2.69%, at the end of Q2, down from 2.87% a year ago, and down from 3.04% two years ago, according to Equifax whose public data only goes back to June 2020 (blue line, not seasonally adjusted).<\/p>\n

During the Free Money era, cash rained down upon households, while credit card spending for travel and other activities was limited by restrictions, and delinquency rates dropped to ultra-low levels. When that party came to an end, there was a bit of a hangover, but that hangover has been getting worked off.<\/p>\n

\"\"<\/p>\n

For prime-rated cardholders<\/strong>, the 60-plus days delinquency rate declined to 0.84%, the lowest since the free-money era, and well below any time before the free-money era, according to data from Fitch Ratings, which tracks the performance of Asset Backed Securities (ABS) backed by prime credit card balances.<\/p>\n

\"\"<\/p>\n

The mystery of the 90-day plus delinquency rate<\/strong>. There has been some hullabaloo over the past year, based on the rising 90-plus days delinquency rate for credit cards, published by the New York Fed and based on Equifax credit reports. This rate was endlessly cited as Exhibit A of how consumers are cracking before our very eyes.<\/p>\n

However, when the New York Fed released its Q2 Households Debt and Credit Report earlier in August, it clarified that issue in an interesting\u00a0blogpost<\/a>:<\/p>\n

These were \u201cstale, charged-off debts\u201d that banks haven\u2019t yet removed from their customers\u2019 credit reporting as they might still be trying to collect those charged-off debts. This was a new trend. In pre-pandemic years, banks removed those stale charged-off debts from their credit reporting sooner, and those old charged-off debts would disappear from the Equifax 90-plus day delinquency rate. The New York Fed in its blogpost:<\/p>\n

\u201cWe find that the stock delinquency rate is rising because of a pool of stale, charged-off debts that lenders have been reporting for longer durations, rather than a fundamental worsening in the incidence of delinquency.\u201d<\/p>\n

Credit card balances measure spending, not borrowing<\/strong>.<\/p>\n

Credit card balances are statement balances before payments are made. They\u2019re a measure of spending, not a measure of borrowing. Most of these charges get paid off every month by due date and never accrue interest.<\/p>\n

Credit cards are the dominant consumer payments method for smaller purchases, such as for restaurants, travel reservations, online purchases, purchases at point-of-sale retail terminals such as at stores and stalls, wireless bills and streaming subscriptions charged automatically to the credit card, etc.<\/p>\n

Credit card payment volume runs well ahead of debit card payment volume. Payments where credit cards are generally not accepted (rents, mortgage payments, etc.) and very large payments (down payments for a house, tax payments, auto purchases, etc.) tend to be made via check or ACH bank transfers. Cash is still being used by some holdouts, but mostly for small purchases.<\/p>\n

In 2024, consumers in the US paid for $6.51 trillion in goods and services with their credit cards, up by 11.7% from two years earlier, according to the Federal Reserve\u2019s payments study, released in July.<\/p>\n

The study does not provide data for 2025. But the Nilson Report estimated that in 2025, credit card payments grew by 6.1%. Credit card platforms, such as Visa, Mastercard, and American Express, have reported strong annual growth rates in credit card payments. For example, Visa reported in its most recent quarterly financials that payments volume by US cardholders rose by 9% year-over-year through Q1 2026, after somewhat slower growth rates last year (+6.8%).<\/p>\n

So we can estimate that credit card payments grew by about 6.1% in 2025, which would amount to $6.9 trillion (estimate for 2025 indicated in blue). This is how much money flowed through US consumers\u2019 credit cards per year:<\/p>\n

\"\"<\/p>\n

Credit card balances.<\/strong><\/p>\n

Credit card statement balances<\/strong> rose by $54 billion (+4.5%) year-over-year to $1.26 trillion, according to the New York Fed\u2019s Household Debt and Credit report based on Equifax data (red line in the chart below).<\/p>\n

The majority of those balances get paid off by due date and never accrue interest as cardholders are using the credit cards solely as a payment method, and not as a borrowing method\/<\/p>\n

While nearly $7 trillion flowed through credit cards in 12 months, statement balances rose by only $54 billion over the 12-month period.<\/p>\n

\u201cOther\u201d consumer loans\u00a0including BNPL<\/strong> (blue line) rose by $28 billion, or by 5.2%, year-over-year, to $568 billion.\u00a0This category includes personal loans, Buy-Now-Pay-Later (BNPL) loans, payday loans, etc. These balances, except current BNPL balances, accrue interest.<\/p>\n

The balances have barely risen over the past 23 years, despite population growth, income growth, spending growth, inflation, and now BNPL loans.<\/p>\n

\"\"<\/p>\n

The burden of credit cards.\u00a0<\/strong><\/p>\n

Credit card balances (red in the chart above) and \u201cother\u201d consumer debt (blue above) combined rose to $1.83 trillion.<\/p>\n

The debt-to-income ratio is a classic way of evaluating the burden of a debt. Household disposable income, released by the Bureau of Economic Analysis, consists of after-tax wages, plus income from interest, dividends, rentals, farm income, small business income, transfer payments from the government, etc.<\/p>\n

But it\u00a0excludes capital gains, which is where the wealthy make most of their money. Excluded are thereby income from stock-based compensation plans and capital appreciation where billionaires make their billions.<\/p>\n

The debt-to-disposable income ratio\u00a0for credit cards and \u201cother loans\u201d combined was 7.75% in Q2, up a hair from a year ago (7.68%), and remains historically low, except for the free money era that distorted household disposable income out of all proportion.<\/p>\n

\"\"<\/p>\n

How much room left on those credit cards?<\/strong><\/p>\n

The aggregate credit limit rose by $324 billion year-over-year to a record $5.56 trillion (blue in the chart below). With credit card balances at a measly $1.26 trillion (red), the total available credit rose by $270 billion year-over-year to a record $4.30 trillion.<\/p>\n

Banks make money on the swipe fees they earn every time a customer uses their credit card to pay. The merchant pays the swipe fees. In addition, many cards come with annual fees. These fees are a big profit center for banks, and so banks and their affiliate partners, such as airlines, aggressively market their cards to get people to set up new accounts. As inducement, they offer kickbacks to cardholders, such as 1% or 2% cash-back or miles or whatever.<\/p>\n

This chart shows that credit cards are $4.3 trillion away from being \u201ctapped out\u201d (gray arrow). Households have been racking up hardly any credit card debts (red line), compared to their soaring credit limits (blue line). They\u2019ve been so prudent with their credit cards, despite banks shoving huge credit limits down their throats, that it\u2019s practically scandalous. Now if the federal government, the biggest drunken sailor of them all, could just be a quarter as prudent<\/a>!<\/p>\n

\"\"<\/p>\n

This rounds off my four-part quarterly analysis<\/strong> of household debt. Here are the other three parts:<\/p>\n

The State of Americans\u2019 Auto Debt<\/a><\/p>\n

Household Debts, Debt-to-Income Ratio, Delinquencies, Foreclosures, Collections & Bankruptcies in Q2 2026<\/a><\/p>\n

Here Come the HELOCs: Mortgages, Housing-Debt-to-Income-Ratio, Serious Delinquencies, and Foreclosures in Q2 2026<\/a><\/p>\n

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the mug to find out how:<\/strong><\/p>\n

\n\"\"<\/a>\n<\/p>\n

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