US Credit Card Delinquencies Creep Up Past Pre-COVID Levels

U.S. credit card delinquencies and charge-offs are now higher than they were before COVID.

That’s according to findings published Saturday (July 26) by Seeking Alpha, which noted that this resurgence for both metrics in June follows a decline in May.

According to the report, the average delinquency rate — meaning late credit card payments — climbed to 2.79% in June from 2.33% in May, though down from 2.9% in June of last year. In June of 2019, before the pandemic, the average delinquency rate came to 2.19%.

The average net charge-off rate — meaning debts lenders write off as uncollectible — rose to 3.99% last month versus 3.93% in May. Like delinquencies, this rate was down from 4.37% last June, but higher than 3.9% in June 2019.

Both metrics showed sequential rise, on average, in June, setting aside Bread Financial. That company’s June delinquency rate was 140 basis points above the pre-pandemic rate, marking the largest six-year increase among the eight credit card issuers tracked by Seeking Alpha.

These findings come as banks are stepping up efforts to attract higher-income credit users, while increasing qualification requirements for lower-income consumers.

A report last week by The Wall Street Journal (WSJ) found the number of new credit card openings fell for the first time in more than a year in the second quarter, down 5% compared to the same quarter in 2024.

While lenders like JPMorgan Chase and Citigroup are issuing premium cards, banks are also making it more difficult for lower-income consumers to get cards. The WSJ report said that the share credit card-related mail volume that was sent only to customers who fit certain credit criteria reached its highest level in almost three years in April, with more lenders increasing their criteria for new cards than lowering them.

At the same time, subprime borrowers are 3.6 times more likely to express interest in obtaining a new credit card than people with the highest credit scores, PYMNTS reported last week.

Recent earnings from financial firms show that consumers, including subprime ones, are meeting their debt burdens, though there are indications that some are feeling pressure from ongoing inflation and a turbulent macroeconomic environment.

For example, Capital One CEO Richard Fairbank said on his company’s recent earnings call that while the U.S. consumer “is in a great place,” there are “some pockets of consumers [that] are feeling pressure from the cumulative effects of inflation and higher interest rates. And we’re still seeing some delayed charge-off effects from the pandemic, although the improving trend in our delinquencies suggest these effects are moderating.”