The news: Q1 credit card data offered a mixed insight into consumer financial health.

• Credit card balances totaled $1.18 trillion in Q1 2025, down $29 billion from the previous quarter, per the Federal Reserve.
• Credit cards' 90-day delinquency rate was 12.3% in Q1, up from 11.4% in Q4 2024 and 10.7% a year ago.

The bigger picture: After a nearly five-year pandemic-driven pause, the government this month resumed student loan collections and reporting for the more than 5 million borrowers currently in default.

Student loan 90-day delinquencies shot up from .5% in Q4 2024 to 7.7% in Q1 2025, per the Federal Reserve. Student loan balances totaled $1.63 trillion in Q1, up $16 billion from the prior quarter.

This could have major ramifications for credit card issuers.

• Student loan defaults could reduce consumer spending by up to $63 billion a year, according to a Bloomberg Economics estimate.
• Restarting these payments will also lead to less money in consumers’ pockets to repay their credit card balances and make new transactions.
• Missed student loan payments will also hurt consumers’ credit scores, which will impact consumers’ ability to open up new accounts, hurting issuers’ acquisition opportunities.

Our take: Consumer financial health has already been shaky. US consumer sentiment has been in free fall since January 2025 due to concerns surrounding tariffs and fears of a recession.

While it’s a positive sign that some consumers were paid down some of their credit card balances in Q1, the jump in serious delinquencies shows that other consumers’ financial troubles are deepening.

Student loan collections could cast an even darker pall over consumer financial health. They will likely slow the credit card recovery and create new problems for issuers.