Credit card charge-offs increased only marginally this quarter, while delinquency rates—an early indicator of future charge-offs—declined slightly but with both remaining elevated.
According to newly released Federal Reserve data, credit card charge-offs rose from 4.05% to 4.06%, a very small increase that suggests the possibility of stabilization following several quarters of fluctuation. Even with this modest movement, today’s charge-off levels remain historically high compared with the past decade.
Charge-Off Rate on Credit Card Loans
Because legal placements typically trail charge-off behavior by 9–12 months, elevated volumes are expected to remain at the current high level well into 2026.
Delinquency Data — The Early Indicator (6–9 Month Lead Time)
Credit card delinquencies—often the earliest signal of future charge-off trends—edged down slightly from 2.92% to 2.87%.
Importantly, the last four quarters have all remained within a narrow band, showing a subtle downward trend but overall forming what appears to be a high-level stabilization.
Although still not definitive, the past year of data suggests account volume may be settling into a new, elevated plateau compared with the prior 10-year historical averages.
Interpreting the Convergence: Stabilization at High Levels
With both delinquencies and charge-offs showing tighter, flatter patterns, the data increasingly points to a period of stabilization—but at a significantly higher base level of account volume than the post-2014/pre-COVID era.
Despite the potential stabilization in account volume, the average credit card balance in dollars continues to increase. This has increased nearly 6% year over year and 2% since the last quarter.
