Credit Card Delinquencies Run 6.4% at Small Banks and 2.9% Across All of Them

The Federal Reserve Bank of St. Louis tracks credit card loan delinquencies on a quarterly basis, and the results provide insight into the state of the economy and the condition of the consumer.

Astute investors may also use the data as a way to gauge the prospects for bank stocks.

Overall, the second-quarter results were mixed. Overall delinquencies and delinquencies for large banks were still elevated, but trending lower. However, delinquencies for smaller community banks are going up.

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The rate of overall delinquencies, which are credit card bills more than 30 days past due, was 2.85% in the second quarter. That was down from 2.91% in Q1, 3.04% in Q2 2025, and 3.22% the same quarter two years ago.

That shows a steady downward trend, but it remains elevated. Between 2012 and 2023, delinquencies were below 2.85%, dropping to as low as 1.53% in Q3 2021.

It is a similar trajectory for the 100 largest banks. In Q2, the delinquency rate for the largest banks was 2.58%, which was down from 2.91% in Q1 and 3.04% in Q2 2025. The recent peak is 3.10% in Q3 2024. But again, from 2012 to mid-2023, the rate was consistently below the current percentage.

Smaller banks see delinquencies rise

Smaller banks, like community banks, have much higher delinquency rates than large banks. But unlike at large banks, where rates went down, rates are rising for smaller banks outside the top 100.

In Q2, the delinquency rate for small banks rose to 6.49%, up from 6.44% in Q1. While it is still lower than the 7.04% rate in Q2 2025 and below the peak of 7.86% in Q4 2023, there was a notable divergence compared to big banks.

This speaks to what’s going on in the economy. Large banks have had the ability to tighten up their lending standards and not make as many risky loans. They can afford to do this because they offer an array of financial services and are making lots of revenue from investment banking, corporate banking, institutional trading, and other areas.

Smaller banks don’t have those additional income streams, so they generally have to take on more credit risk, making more loans to customers with lower credit scores and less disposable income. As a result, the delinquencies are more common. The fact that the delinquency rate for smaller banks ticked up means that their customers are facing more hardships in this economy.

How this impacts bank stocks

For bank stocks, higher credit card delinquencies can have a direct impact on the bottom line.

For starters, the fact that the loan is not being repaid means the bank is losing out on interest income. And if the loan ultimately has to be charged off, it is an acknowledgment that the loan won’t be repaid.

Also, when banks see their delinquencies spike, they are required by federal regulation to boost their provisions for credit losses, which is money set aside to cover bad loans. Those provisions come out of the expense line, and when they are high, it is a drag on earnings. So when you see delinquencies go up, you can figure that the bank will have to have higher provisions for credit losses.

Large banks have a better ability to absorb these hits with M&A and institutional trading generating significant revenue. Plus, they can generally offer lower deposit rates because customers are more likely to stay with them due to the other services they offer. That leads to higher net interest income. Smaller banks don’t always have that same luxury.

Bank stocks have generally performed well this year. The KBW Nasdaq Bank index, which tracks the 24 largest banks, is up 14% year to date. The KBW Nasdaq Regional Banking index is performing even better, up about 16% YTD.

But with an interest rate hike on the table and a fragile economy, investors should keep a close eye on credit card delinquencies as they offer insight into the state of the consumer, the economy, and banks.