Which debt risk is bigger: retail cards with 33% rates or regular credit cards?
Nobody knows whether economic policy in Washington will result in inflation or recession. But if it’s recession, then already-strained consumers get hit first, so here’s a quick consumer debt alert.
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Editor’s Note: This post and chart is part of our Close To Home programming that focuses on how best to serve consumers. We do this in 2 ways: (1) consumer trend analysis workshops for lenders, bankers, and housing pros, and (2) media, education, and community engagement to teach consumers how to understand the real estate economy. If you want more information about Close To Home and access to our charts and analysis on consumer trends, please reach out, and we’d be happy to connect and brief you.
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RETAIL CREDIT CARD RATES ARE CRAZY HIGH
Hugh Son and Gabrielle Fonrouge at CNBC just noted how “banks are keeping credit card rates high even after the CFPB rule they blamed for high APRs was killed.”
They cited a December 2024 CFPB report, which includes 2 alarming stats on retail credit card rates:
– 90% of retail credit cards reported a maximum APR above 30%, compared to only 38% of non-retail general purpose cards with rates above this rate threshold.
– In December 2024, private label cards for top retailers had an average APR of 32.66% (I rounded up to 33% for headline above).
BUT RETAIL CREDIT CARD RISK LOOKS STABLE
As an offset to super high rates, trends on outstanding retail cards and late payments are decent:
– As of 4Q24, total outstanding U.S. credit card debt is $1.21 trillion (New York Fed), and total retail credit card debt is $57.4 billion as of March 2025 (Equifax).
– This means that just 4.74% of total U.S. credit card debt is on retail credit cards*.
– Equifax also reports that, as of March 2025, there are 128.9 million retail credit credit cardholders, and 4.61% are 60 days late on payments.
– A year ago (March 2024), there were 173.1 million retail credit cardholders, and 4.83% were 60 days late at the time.
– So, compared to last year, there are now 25% fewer outstanding retail cards and the 60-day delinquency rate is 4.5% lower.
In general, this trend of fewer outstanding retail cards with lower delinquency rates is positive.
And subprime borrowers with credit scores below 620 are 14.9% of all retail cardholders. This is a reasonably low subprime percentage**.
Still, when the economy softens even a little, these are the folks who may be most sensitive to retail card rates around 33%.
And we know card issuers are unlikely to lower these high rates.
ARE REGULAR CREDIT CARDS A BIGGER ECONOMIC RISK?
As for some broader perspective, America has $18.04 trillion in consumer debt outstanding.
Of this, $12.6 trillion is mortgage debt, $400 billion is home equity debt, both in the housing category.
The remaining $5.04 trillion is non-housing debt, with student loan, car loan, and credit card breakdowns shown below.
Also below are late-payment rates on all of this debt.
Note how 90-day credit card delinquency rates are the highest of any debt category at 7.18%.
By comparison, retail credit card delinquency rates are much lower at 4.61%.
And remember, just 4.74% of total U.S. credit card debt is on retail credit cards* — the remaining 95.26% is on regular credit cards.
BOTTOM LINE
Retail credit cards don’t appear to be the primary risk in America’s consumer debt.
Retail credit card rates make for louder headlines with 33% rates.
But people are having more trouble repaying their main credit cards right now.
Please reach out with any questions, or nuances I’ve missed.
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Reference:
– Total U.S. housing & non-housing debt is $18.04 trillion as of 4Q24 (NY Fed)
– U.S. National Consumer Credit Trends Through 1Q25 (Equifax)
– Dec 2024 Report On High Cost Of Retail Credit Cards (CFPB)
* The statement that “just 4.74% of total U.S. credit card debt is on retail credit cards” compares Equifax March 2025 data on outstanding retail card balances ($57.4 billion) to New York Fed 4Q24 data on all outstanding credit card balances ($1.21 trillion). If the denominator was March 2025 Equifax total credit card balances ($1.04 trillion), the statement would say “just 5.52% of total U.S. credit card debt would be on retail credit cards.” The conclusion is the same: the overwhelming majority of credit card debt is on regular credit cards, not retail cards. And 90-day late payment rates (of 7.18%) on regular credit cards is way higher than 60-day late payment rates (of 4.61%) on retail cards.
** Of the 14.9% of subprime retail credit card borrowers with credit scores below 620 (Equifax data), I don’t know how many have low scores because of bad longer-term track records vs. folks whose scores are low because they’re just starting to establishing credit histories — and retail cards are often an entry point for establishing credit.