Credit card balances hit $1.26 trillion in the second quarter of 2026, close to last year’s record, and researchers at the Federal Reserve Bank of New York’s Liberty Street Economics say the two most-cited delinquency measures are telling different stories about how distressed borrowers actually are. The “stock” delinquency rate, drawn from credit reports, rose from 7.6% in the third quarter of 2022 to 12.8% in the first quarter of 2026. The “flow” delinquency rate, which tracks new defaults, has stayed relatively stable over almost two years.
The divergence matters for lenders and risk teams because it changes which number should drive underwriting and provisioning decisions. The researchers trace the gap to how charged-off debt gets reported: lenders typically charge off accounts 120 to 180 days past due, but continue reporting the balances to credit bureaus for longer than they used to, with the share of charged-off debt still reported a year later roughly doubling, from about 40% between 2004 and 2012 to about 80% by 2024. That change alone inflates the stock measure with older, already-written-off balances that the flow measure excludes.
The original insight is that when charged-off balances are stripped out, all three delinquency measures converge and show stability since 2024, meaning headline stock-delinquency numbers may be overstating current borrower stress, a distinction relevant to lenders extending credit through embedded and BNPL channels such as installment-based consumer credit programs and banks weighing new consumer-lending partnerships like the recent bank stakes in digital lending platforms. As the researchers put it: “When the question is ‘how are households doing right now?’ the flow delinquency rates… provide a more accurate view of current consumer repayment behavior.”
Source: Federal Reserve Bank of New York
