Card delinquencies ease while student-loan delinquencies and forbearance rise

Household credit is sending two signals. Banks and card issuers that reported third-quarter results in the week of October 19 described stable or improving card repayment, while Sallie Mae reported that more of its borrowers are behind on payments or in forbearance. Gasoline, which feeds directly into household budgets, costs $1.265 more than a year ago, and consumer prices are rising faster than wages. This analysis lines up the readings from the Federal Reserve, issuers' filings and the Energy Information Administration to describe where household finances appear strong and where they appear strained, using only what the sources report.

Borrowing: card balances fell in August

The Federal Reserve's G.19 release put the increase in consumer credit in August at an annual rate of 1.9%. Revolving credit, which mainly consists of credit-card balances, decreased at a rate of 4.2%, while nonrevolving credit, which includes auto and student loans, increased at 4.1%. Revolving credit outstanding fell to $1,352,414.00 million in August from $1,357,200.70 million in July, a decrease of $4.79 billion (computed), while total consumer credit outstanding rose to $5,196,778.44 million from $5,188,497.83 million.

Card issuers: delinquencies down, spending up

Synchrony reported that loans 30 days or more past due were 4.34% of period-end loan receivables, compared with 4.39% a year earlier, and loans 90 days or more past due were 2.06%, against 2.12%. Net charge-offs were 4.79% of average loan receivables against 5.16%. The company's chief financial officer said delinquency trends were consistent with seasonality and that net charge-offs were declining to a seasonal low. Purchase volume rose 8% to $49.7 billion, and loan receivables increased 3% to $103.3 billion. The company said that growth in two of its platforms, Home & Auto, up 9%, and Diversified & Value, up 13%, reflected in part the impact of higher gas prices.

Capital One's net charge-offs were $3.1 billion in the quarter. Its provision for credit losses decreased by $73 million to $2.9 billion, and it released $225 million of loan reserves. Credit card period-end loans were $276.4 billion. American Express reported record revenue of $20.1 billion, up 9%, and billed business of $454.0 billion, up 8%. Its net write-off rate was 1.8%, down from 1.9% a year earlier, and its provisions for credit losses fell to $1.0 billion from $1.3 billion, with a reserve release in the quarter rather than a reserve build. It raised its full-year earnings guidance to $18.30 to $18.60 a share.

Student loans: more borrowers behind

Sallie Mae reported the reverse pattern. Its delinquencies were 4.2% of loans in repayment against 4.0% a year earlier, and its loans in forbearance were 2.3% against 2.0%. Net charge-offs were $90.4 million against $77.5 million. The company attributed the increase primarily to misaligned third-party debt resolution practices, an explanation that its release gives and that the data in the release do not test.

The same quarter set a record for the lender's originations. It booked $3.4 billion of private education loans, 15% more than a year earlier, and graduate loan originations grew 119% in the first academic year after changes to federal student loan programs. Sallie Mae reported a net loss of $0.19 a share and cut its 2026 diluted earnings per share outlook to $1.95 to $2.05 from $3.10 to $3.20, and raised its outlook for net charge-offs to $400 million to $420 million from $365 million to $385 million. Non-interest expenses rose 22% to $221 million, which it attributed to peak-season costs to capture new volume.

Gasoline: lower for four weeks but well above last year

According to the Energy Information Administration, the US average price of regular gasoline was $4.284 a gallon on October 19, down from $4.331 on October 12 and $4.354 on October 5. It was $1.265 higher than a year earlier. Diesel, at $6.276, rose $0.097 from the previous week. Gasoline has been falling for four consecutive weeks. In September, according to the Bureau of Labor Statistics, the gasoline index rose 9.1% and accounted for more than half of the month's increase in consumer prices.

Income: benefits rise with prices, pay lags

Social Security recipients will receive a 3.6% cost-of-living increase in 2027, announced on October 14, against 2.8% for 2026; the average benefit rises by about $75 a month. The adjustment is based on the consumer price index for urban wage earners and clerical workers. For workers, average hourly earnings rose 3.0% in the year to September, 0.7 percentage point below the 3.7% rise in consumer prices (computed).

Savings: low bank rates, large cash holdings

The Federal Deposit Insurance Corporation's national rate for savings accounts was 0.38% in October. For a 12-month certificate of deposit it was 1.76%, against 4.54% on a comparable Treasury security. Money market funds held $7.94 trillion in the week ended October 21, up $21.49 billion on the week. Households that move cash from bank savings accounts to these funds would earn more under current rates, but the data do not show how much household money has in fact moved.

What the data show

Taken together, the issuers' filings describe card borrowers who are, on average, paying as expected, in spite of higher gasoline prices, which one issuer noted as boosting spending. The Sallie Mae figures describe a part of household borrowing under more strain. The sources do not allow a comparison of the two groups of borrowers, who differ in age and type of debt, and they do not show whether the gap between prices and wages will affect repayment. The Federal Reserve's next consumer credit report and issuers' monthly credit figures will show whether the August decline in card balances continues.