The data: Consumers again demonstrated resilience in the New York Federal Reserve’s most recent Quarterly Report on Household Debt and Credit.

• Total credit card balances rose slightly to $1.233 trillion—a sign that consumers are still spending ahead of the critical holiday season.
• Credit card balances 30+ days delinquent also rose YoY to 8.8% but are still below the most recent peak of 9.05% in Q2 2024. This was the smallest Q3 increase since 2021, when delinquencies actually improved.

However, much-watched student loan delinquencies rocketed up to 14.41% for balances 30+ days past due, the highest since the New York Fed started tracking the figure in Q1 2004.

How we got here: Consumers’ ability to weather economic uncertainty has been put to the test amid signs of reigniting inflation, weak to negative job growth, and dour consumer sentiment.

But the limited data available amid the federal shutdown offers glimmers of tempered optimism.

• ADP projected that private employers added 42,000 jobs in October—a weak number on its face but a sharp reversal from a 29,000 loss in September.
• September inflation came in lower than expected at 3.0% YoY, but that’s still well above the Federal Reserve’s target.
• And the Atlanta Fed’s GDPNow estimate for Q4 is at an impressive 4.0%—though of course, it’s currently unable to take into consideration key economic data from the Bureau of Labor Statistics.

What this means for issuers: For three years lenders have largely stayed on the sidelines when it came to extending credit to average consumers—the average Bank of America credit cardholder’s FICO score was 777 as of Q1 2025.

Banks have already started to shift their lending behavior, but it may be too late.

• For the first time since 2022, no banks reported that they were increasing their lending standards for personal loans, according to the Fed’s October senior loan officer survey.
• The smallest number of banks since 2022 said they were tightening lending for credit cards (4.2%).
• And lending standards for auto loans have loosened for the last two quarters.

If economic anxieties persist, consumers are less likely to seek out credit products, trading down to debit cards or putting off purchases entirely. Demand for credit cards was negative for four of the last five quarters, per the senior loan officer survey.

Banks were reacting to an explosion in delinquencies in 2022 and 2023, but they may have overcorrected—giving an opening to BNPL providers who offer lending with looser underwriting or new challengers like rewards debit cards issued by fintechs.