According to the St. Louis Federal Reserve, credit card delinquencies are hovering at 2.98% as of Q3 2025. Delinquency rates are calculated as the ratio of the dollar amount of delinquent loans to the dollar amount of all loans outstanding, and it’s inching back toward territory not seen since the 2008 recession.
Historically, delinquency rates surged around the 1990–1991, 2001, and 2008–2009 downturns, peaking near the end of each recession. The noticeable pattern is these rates start rising several quarters before a recession begins. NerdWallet analysts say today’s numbers mark the highest level since the Great Recession, driven by households relying on swiping plastic to fill wide budget gaps.
Business loan delinquencies followed a similar path before 2008, beginning their climb in late 2006, five quarters before the recession officially started. Late payments are more than credit card problems. A recent survey found 37% of Americans have been hit with late fees on everything from utilities to rent. Though at times people simply miss a bill, increasingly it’s because the money just isn’t there until the next paycheck arrives.
Swiping for the essentials
With rising prices across groceries, childcare, utilities, and other necessities, many families are being forced into a daily decision of using either cash or credit? More often than not, credit wins.
A PYMNTS report found that 52% of consumers now use a credit card at the grocery store. And younger adults aren’t immune as 44% of Gen Z say they use credit cards to support their financial well-being, according to John Stevenson. But relying on credit for the basics has a way of turning a temporary fix into a long-term trap. That’s because once debt starts rolling downhill, interest turns it into a snowball. Credit card Interest rates are among the highest borrowing costs in the country, averaging above 20%.
Economy of revolving debt
Nearly half of Americans carry credit card debt, 46% report having a balance, and 23% don’t think they’ll ever pay it off. Among those carrying balances, 45% say their debt came from emergency or unexpected expenses such as car repairs and medical bills and 28% cite day-to-day costs like groceries, childcare, and utilities.
Consumers are also encouraged to put predictable monthly expenses on cards to earn rewards. About 81% of U.S. consumers prefer paying with cards over cash. Used responsibly, that can build credit and provide useful perks. But if balances aren’t paid down, the rewards evaporate under interest. Debt and Bankruptcy attorney Ashley Morgan says one of the clearest warning signs is when people use cash on hand to make minimum payments, only to put the same expenses back on the card that week. “It is a cycle to pay down a card just to use it again because you cannot afford to pay down the debt,” she explained. A pattern that keeps accounts technically “current” while masking growing financial strain. And strain is increasingly visible, as Natalia Brown of National Debt Relief adds “Relying on credit cards for everyday essentials…is a sign that a family is financially stretched.”
A recent National Debt Relief survey found families with credit card debt already owe more than $14,000 on average. With interest rates rising, keeping ahead of monthly balances is only becoming more difficult. Americans aren’t overspending their cards on luxuries but covering gaps in household budgets. Rising delinquencies may not signal a recession yet, but they’re echoing the same early warning signs that preceded past downturns. And unless incomes begin to catch up with rising costs, unpaid debts could snowball into a warning sign that the household-level adjustment is an economy-wide problem.