Market Polarization: More Super Prime and Subprime Borrowers
The credit market now features a larger proportion of super prime borrowers—individuals with excellent credit scores—and subprime borrowers, who are considered higher risk. This has resulted in fewer consumers falling into the middle ground when it comes to creditworthiness.
According to TransUnion data, from Q3 2019 to Q3 2025, the percentage of super prime borrowers increased from 37.1% to 40.9%, which translates to approximately 16 million additional customers with outstanding credit histories.
The Rise in Super Prime and Subprime Segments
At the same time, there has been an uptick in subprime segments after they contracted during the pandemic due to many consumers paying down their debt. This growth, along with the rise of super prime customers, has contributed significantly to higher origination volumes and overall expansion within the credit card market.
Brian Riley from Javelin Strategy & Research highlighted that TransUnion provides robust card-level data based on information furnished by lenders, showing a clear polarization among consumers. He also noted that cards aimed at super prime customers are gaining popularity, with major issuers like American Express, Chase, and Citi enhancing their offerings to attract more affluent customers.
Enhanced Card Benefits and Increased Fees
To reach this demographic, American Express and Chase have recently improved the benefits of their premium cards while raising annual fees. Citibank has also entered the super prime market with the launch of its Strata Elite card. Additionally, Klarna has introduced subscription tiers for its debit/BNPL card, offering luxury perks without the traditional debt associated with credit cards.
Growing Credit Card Balances and Shift to BNPL
The increasing credit card balances have driven many consumers, particularly those in subprime categories, towards Buy Now Pay Later (BNPL) cards. Despite this, delinquency rates in the subprime segment have continued to decline, likely reflecting improving consumer credit health or tighter credit lines from issuers.
Riley observed that despite significant debt and ongoing credit growth in the subprime sector, delinquencies are not rising alarmingly but are increasing slightly. He suggested watching younger segments for signs of stress, especially those in the subprime category.
Indicators of Economic Stress
Credit card managers should monitor two specific data points: unsecured personal loans and auto loan trends as inflation persists. The number of unsecured personal loans has risen to 31.8 million from 25.4 million in 2022, indicating household budget stress. Auto loans are also increasing and could have a significant impact on households.
With economic conditions uncertain due to fluctuating tariffs, there may be more pressure on revolving debt. While the focus remains on super prime and subprime consumers, middle America’s needs should not be overlooked as they drive most of the volume in the market.
