Writer: Eric Bank
Editor: Lillian Guevara-Castro
Reviewer: Adam West
Key Takeaways
- Credit card balances increased to $1.209T in Q2 2025, and 46% of card users have revolving debt month to month, reflecting increased financial distress.
- Delinquencies are highest among young or low-scoring credit borrowers, who pose more risk to subprime lenders.
- Providers may have to place more reliance on product innovation and real-time data as existing credit cues don’t keep pace with emerging risk.
Combined U.S. credit card balances rose by $27 billion in Q2 2025, putting the national balance at $1.209 trillion — just shy of an all-time high.
While the average credit card APR hovers around 24%, revolving balance costs are quietly compounding in the background, taxing household budgets that are already stretched to the limit.
This behavior hasn’t escaped scrutiny from within the subprime universe. Nonprime and thin-file borrowers are more likely to carry balances month to month. They also have less buffer against fluctuations in interest rates and are subject to employment volatility and missed paychecks.
For many within the low- or modest-earning demographic, credit cards have become a fiscal pressure valve.
Bankrate data indicates 46% of card users revolved their balances during Q2. Concurrently, the New York Fed’s Household Debt and Credit Report confirms credit card delinquencies have now exceeded their pre-2020 baseline, and credit card delinquencies are sharply higher among card users younger than 40 years old.
These markers are early warning signs to lenders sensitive to the nonprime market segment.
Revolving Debt Becomes a Persistent Burden
In spite of widespread awareness of the cost of card balances, credit card borrowing has increased steadily since 2022. Growth has been particularly acute among financially stretched households. Subprime consumers often have restricted access to low-interest credit and fewer options to consolidate or refinance existing debts.
Consider Mission Lane, which has focused on thin-file borrowers and, in doing so, has learned about repeat users whose incomes remain flat even as expenses tick up.
OppFi has implemented features to streamline payments and structure debt repayment, which recognizes that long-term subprime use is a risk factor as well as a business opportunity.
For many borrowers, growing card balances aren’t a fleeting spike but a continuing pattern. Credit card usage has shifted toward essential spending, blurring lines between consumer choice and necessity. That shift has significant resonance across credit risk scoring, collections, and broader portfolio management mechanics.
Implications for Subprime Lenders
Rising balances and deteriorating repayment timelines are compelling subprime-focused lenders to revisit risk frameworks. Firms that lean heavily on traditional credit scores may find themselves reacting late to borrower distress signals — particularly in an environment marked by price inflation and job market churn.
One workaround lies in tapping richer data sources. Real-time cash flow analysis, transaction histories, and behavioral cues can provide clearer visibility into near-term repayment ability. Gradual credit-building products that steer borrowers toward lower rates could also gain ground, especially among mission-aligned lenders.
Oportun, a financial services company that focuses on low-to-moderate income consumers, has openly advocated for blending conventional bureau data with behavioral indicators.
As borrowing habits drift further from pre-pandemic norms, this hybrid approach could emerge as a decisive advantage in subprime credit management.
At the same time, rising demand for flexible revolving credit underscores the space left open by traditional products. Nonbank lenders that can fill those gaps with smarter terms and adaptive underwriting may capture a growing share of financially underserved borrowers.
Long-Term Outlook
While $1.209 trillion hasn’t yet topped the record, current momentum suggests the threshold won’t hold for long. If delinquency rates continue to climb, lenders and regulators may have to grapple with more pointed questions about transparency, fairness, and inclusion — especially for nonprime consumers.
As 2026 looms, subprime issuers face a tricky landscape. Punishing APRs, high balances, and uneven recovery conditions leave little flexibility to stale playbooks.
Lenders that can combine risk controls and increased access — and, ideally, optimize controls and access before terms shift — will be best positioned to navigate the upcoming cycle.
