Subprime credit-card delinquency spiked well above pre-pandemic levels after 2021, and has only partly normalized

Summary

Subprime credit-card delinquency plunged in 2020-2021 on stimulus checks and forbearance, then rose sharply from 2022 through 2023-2024 as those supports wore off and the Fed raised rates. By late 2023, the actual subprime (credit score below 620) card delinquency rate hit roughly 15.4%, well above pre-pandemic norms - but a Federal Reserve Board analysis shows a large share of that increase is a statistical artifact of who counts as 'subprime' today (fewer, more-distressed people), not pure across-the-board deterioration. Since roughly 2024, delinquency and charge-off measures for subprime and private-label cards have improved somewhat as banks tightened underwriting sharply, but as of the most recent 2025-2026 data, credit-card delinquency (including the subprime segment) remains above, not fully back to, pre-pandemic (2019) levels - even as lenders have begun re-extending credit to subprime borrowers again, whose population share has now returned to its 2019 size.

The pandemic dip, then the reversal (2020-2024)

Federal Reserve Board researchers (Driscoll, Flagg, Katcher, and Sommer, using the New York Fed Consumer Credit Panel/Equifax data) documented that delinquency rates across the credit-score distribution fell to near-record lows in 2020-2021 due to stimulus and forbearance programs, then rose starting in the second half of 2021. By 2023:Q3, overall auto and credit-card delinquency rates had already exceeded their pre-pandemic levels, and the increase for subprime borrowers specifically was far larger than for prime or near-prime borrowers.

For credit cards specifically, the actual 30-day-plus delinquency rate among subprime borrowers (Equifax Risk Score below 620) reached 15.4% in 2023:Q3, against an overall (all-borrower) card delinquency rate of only 3.5% the same quarter - a stark illustration of how concentrated distress is in the subprime tier.

A crucial wrinkle: credit-score migration inflates the 'subprime' number

The Fed Board note's central finding is that much of the apparent surge in subprime delinquency is a composition effect, not pure stress growth. During the pandemic, many borrowers' scores rose enough to migrate OUT of the subprime bucket - the subprime share of the population fell from about 23% to 18% - leaving a smaller, disproportionately weaker group still classified as subprime. When the Fed researchers re-ran the numbers holding each consumer's 2019:Q4 credit score fixed (i.e., asking what the subprime rate would look like if the same people who were subprime in 2019 were still being tracked as the subprime group), the 2023:Q3 subprime credit-card delinquency rate would have been about 9.5% instead of the actual 15.4% - considerably lower and with a much more muted rise. In other words: the headline subprime delinquency rate substantially overstates how much worse a like-for-like population of borrowers is actually doing, because the subprime group today is a smaller, harder core than in 2019.

The most recent trend (2024-2026): improving, not yet fully recovered

Multiple independent data sources point the same direction over the past one to two years:

• Kansas City Fed reports that during the 2022-2024 monetary tightening cycle, the subprime credit-card delinquency rate climbed 7.4 percentage points trough-to-peak, and by early 2025 had fallen for two consecutive months - though it 'remains elevated' relative to pre-pandemic.
• Philadelphia Fed's Y-14M large-bank data (Q1 2025) found that all measures of card delinquency declined year-over-year for the first time since Q4 2021, driven by several years of tightened underwriting (the subprime share of large-bank card originations fell from 23.3% in Q1 2022 to 16.4% by Q1 2025). But the same report is explicit: 'despite these early signs of improvement, net charge-off and delinquency rates remain elevated compared with pre-pandemic levels.'
• TransUnion's Q3 2025 Credit Industry Insights Report shows the subprime share of the credit-active population has 'gradually returned to pre-pandemic levels' (14.4% in Q3 2025 vs. 14.5% in Q3 2019, after dipping to 11.8% in 2021) - but notes this reflects a bifurcating market: subprime credit-card originations grew fastest of any tier (+21.1% year-over-year) and subprime balances grew +6.4%, meaning lenders are actively re-extending credit to this riskier population again even as overall borrower-level 90+ day card delinquency (2.37% in Q3 2025, across all tiers) sits below its 2019 comparison period in TransUnion's series.
• NY Fed's Q2 2026 Household Debt and Credit Report shows the broad 60+ day delinquency rate across all cards (including subprime and private-label) at 2.69%, down from 2.87% a year prior - an improvement - but flags that new delinquencies (the 'flow' into serious delinquency, 6.97% of balances) 'remain at elevated levels, a trend we'll continue to monitor,' and are little changed from a year ago. A companion Liberty Street Economics post (Aug. 2026) explains that the late-stage (90+ day) delinquency SHARE of balances jumping from 7.6% to 12.8% since 2022 is mostly a lagging, stock-based artifact of old charge-offs remaining on reports, not a sign new stress is accelerating.

Bottom line

Direction of travel: down from 2020-21 covid-era lows, up sharply through 2022-2024 to well above pre-pandemic levels, and modestly improving since roughly 2024-2025 as banks tightened lending. Is it back to pre-pandemic? Not fully. The population SHARE of subprime borrowers has returned to its 2019 size, and lenders are once again growing subprime originations - but the delinquency RATE itself, and card losses/charge-offs more broadly, remain above pre-pandemic norms across every source reviewed here (Fed Board, NY Fed, Philadelphia Fed, and Kansas City Fed all use the word 'elevated' relative to pre-pandemic in their most recent releases). A meaningful part of the peak reading, however, reflects a smaller and more concentrated subprime population rather than uniformly worse behavior by borrowers who would have been classified subprime in 2019.