Non-Prime Card Brief
Market intelligence for sub-prime and near-prime credit card issuers
- ChartersMission Lane wins a card-bank charter and Avant applies; Enova backs away from buying a bank.
- CreditAugust losses fell year over year at Bread and Synchrony; Capital One delinquencies rose for a second month.
- CompetitionBig banks booked 18.5% of new card accounts below 660, up from 16.1%.
- EconomyThe Fed hiked to 3.75–4.00%, and wage growth (3.0%) is trailing inflation (3.4%).
- Regulation41 states settle with a subprime lender on ability to repay; Amex is fined $350M over AML.
- CapitalSubprime card ABS still clears; Atlanticus sells the Mercury brand.
- InterchangeThe White House backs the CCCA; the Visa/Mastercard settlement hearing is November 16.
- Coming upBig-bank earnings and CPI this week; card issuers report October 20–23.
Charter or rent? The fintech card model just split in two.
On September 25 the OCC conditionally approved Mission Lane Bank, N.A., the first new credit-card-only bank in about 20 years, and Avant has applied for its own charter. Meanwhile Enova dropped its bank purchase, citing "political pressure." The lesson is that a narrow, well-capitalized card bank can get approved, while a high-APR lender buying a full bank cannot. Issuers still using a partner bank now face competitors that can eventually fund with insured deposits.
Closer to home, large banks are moving down the credit curve: accounts with scores under 660 were 18.5% of their new card accounts in Q2, up from 16.1% a year earlier. Expect tighter competition for the same applicants into 2027.
August card credit: near-prime books keep improving
Monthly credit results that public issuers file with the SEC give the earliest read on card losses. August figures came out September 14–15. September figures arrive with Q3 earnings, starting October 20.
| Issuer · August 2026 | Net loss rate | 30+ day delinquency | vs. Aug 2025 |
|---|---|---|---|
| Bread FinancialPrivate label & co-brand | 6.40% | 5.36% | Losses −117 bp |
| SynchronyTotal loan book | 4.9% | 4.2% | Losses −20 bp |
| Capital OneDomestic card | 4.16% | 3.57% | Delinq. up from 3.48% in July |
| CitiCard issuance trust | 2.03% | 1.29% | Losses up from 1.90% in July |
| American ExpressU.S. Consumer | 1.7% | 1.1% | Flat with July |
| JPMorganChase card issuance trust | 1.66% | 0.80% | Losses up from 1.58% in July |
Shaded rows are the books with the most non-prime exposure. Trust data and managed-portfolio data are not directly comparable. Sources: Bread 8-K · Synchrony 8-K · Capital One 8-K · Citi trust data · Amex 8-K · Chase trust report
Why it mattersBread's losses are down more than a full point year over year, and Synchrony's are lower too. The 2023–24 tightening is still paying off. The one to watch is Capital One, whose card delinquencies have risen two months in a row. Synchrony also told investors it loosened approvals last year and expects losses to rise modestly in 2027 as those accounts season (Barclays conference).
The big banks are coming down-market
Share of large-bank new card accounts with credit scores under 660
Philadelphia Fed Large Bank Credit Card data, Q2
Large banks are booking more sub-660 accounts, but with small lines: the median new line for those borrowers is about $600. That is a starter card aimed at the same customers non-prime issuers compete for. The Philly Fed also reports that 37% of accounts pay in full, matching the 2021 peak, and that card delinquency has fallen for more than a year.
Source: Federal Reserve Bank of Philadelphia, Large Bank Consumer Credit Card Data, Q2 2026 (released Oct 7)
The Fed is hiking again, and paychecks are losing ground
The Fed raised rates and signaled more
The FOMC voted 12–0 on September 16 to raise the target range a quarter point, to 3.75%–4.00%. Minutes released October 7 show most officials think another hike is likely appropriate by year-end. The next meeting is October 27–28.
Why it mattersPrime is now 7.00%, and variable APRs follow it automatically. Minimum payments rise for revolvers at the same time real wages are falling.
Federal Reserve statement · H.15 rates · PNC on the minutes
A weak jobs report, and wages trailing prices
September payrolls rose just 29,000, with July and August revised down a combined 60,000. Unemployment was 4.2%. Average hourly earnings grew 3.0% year over year, below August's 3.4% CPI. The savings rate was 4.1% in August.
Why it mattersFalling real wages show up first in the early delinquency buckets at non-prime issuers. The September CPI report on Wednesday is expected to show headline inflation rising to about 3.6%.
Consumers are pulling back on revolving debt, and sentiment hit a five-month low
Revolving credit fell at a 4.2% annual rate in August, to $1.35 trillion (Fed G.19). The University of Michigan's preliminary October sentiment reading fell to 46.3, and one-year inflation expectations rose to 4.7%. In the NY Fed's Q2 data, card balances reached $1.263 trillion and the annualized flow into serious delinquency was 6.97%, about the same as a year earlier.
Why it mattersShrinking revolving balances help credit but squeeze interest income. Expect issuers to lean on purchase volume and fee income for growth in Q4.
Fed G.19 · Bloomberg on U. Michigan · NY Fed Household Debt & Credit
The CFPB isn't going away, and the states are filling the gap
A third federal court rejects the theory used to defund the CFPB
On September 26, a federal judge in Oregon sided with 22 state AGs and D.C., ruling that the Fed must fund the CFPB at the level its director deems reasonably necessary. Separately, the Senate Banking Committee advanced Brian Johnson's nomination as CFPB director 13–11 on September 17. He awaits a floor vote.
Why it mattersPlan for a smaller CFPB, not none. A confirmed director would set the agenda on late fees, larger-participant rules and open banking.
41 states settle with Credit Acceptance on "ability to repay" claims
The subprime auto lender agreed on September 17 to pay $75.5 million and forgive more than $630 million of debt. The states alleged it made loans it knew borrowers could not repay.
Why it mattersThis is auto, not card, but the theory carries over. State AGs are bringing ability-to-repay and unfairness claims against subprime lenders without the CFPB. Card underwriting models that are profitable despite high expected losses are an obvious next target.
OCC fines American Express $350 million over AML failures
On October 8, the OCC and the Fed issued orders, and the OCC imposed its first civil money penalty since TD Bank. The OCC said the bank's AML risk assessment focused on deposits rather than its much larger card business.
Why it mattersExaminers expect AML programs to cover card portfolios in full. That includes the card programs that sponsor banks run for fintech partners.
Concora Credit's $9.4 million robocall settlement nears final approval
The settlement in Seals v. Concora Credit resolves claims that the issuer made prerecorded calls to non-customers' cell phones. The claims deadline is October 19, and the final approval hearing is November 24.
Why it mattersWrong-number collection calls remain an expensive TCPA exposure for card issuers.
Watch list
CFPB card data collections: comments on revisions to the Terms of Credit Card Plans survey and quarterly card agreement submissions are due October 30 (Federal Register). Preemption: on October 5 the Supreme Court asked the Solicitor General for its views in three National Bank Act preemption cases (National Law Review). Colorado rate opt-out: the Tenth Circuit's full-court ruling on Colorado's opt-out from federal rate preemption (DIDMCA) is still pending. It will decide whether state-chartered partner banks can export their home-state rates into Colorado.
The funding markets are open for near-prime credit
Mission Lane prices its 20th card trust series as it heads toward a charter
KBRA assigned final ratings on September 23 to the six classes of Mission Lane Credit Card Master Trust Series 2026-B. Credit enhancement ranges from 40.77% on Class A to 3.50% on Class F. The trust is backed by accounts originated through TAB Bank and WebBank.
Why it mattersSubprime card ABS is still clearing, all the way down to the subordinate classes.
Atlanticus sells the MERCURY brand for $27.5 million and exits auto
Atlanticus's Mercury Financial sold the MERCURY name and related IP to an unnamed third party on September 30. It kept the receivables and a 12-month license to keep marketing new accounts under the brand. On September 17, Atlanticus also closed the sale of CAR Auto Finance for about $71 million.
Why it mattersThe Mercury book Atlanticus bought will be migrated to new branding within a year, and Atlanticus is now focused entirely on consumer credit. Watch for a temporary dip in Mercury acquisitions during the switch.
Avant signs a $1 billion forward flow, and Upgrade brings its fifth ABS deal of 2026
InterVest Capital Partners agreed on September 15 to buy up to $1 billion of Avant personal loans over 24 months. Upgrade's $167.5 million Master Pass-Thru Trust 2026-ST5 received preliminary KBRA ratings on October 7.
Why it mattersPrivate credit still has a strong appetite for near-prime consumer assets, which keeps funding available for issuers outside the big banks.
Leadership watch: Avant Bank's proposed management
Avant's September 18 charter application names Charles Whittaker as proposed CEO, Kevin Friedrich as CFO, and Margaret Hermes as President and COO of Avant Bank, N.A.
New data for underwriting, and a new way to win declined applicants
Experian launches a cash-flow credit bureau
Experian Cashflow Data Bureau, a separate consumer reporting agency subject to the Fair Credit Reporting Act, launched October 6. It offers a cash-flow score and a combined credit-and-cash-flow score, built on bank-account data that consumers consent to share. Experian claims up to 25% more approvals.
Why it mattersCash-flow underwriting for thin-file applicants now comes from a credit bureau, not just a fintech data provider. Expect your partners and your competitors to start testing it.
JPMorgan reportedly weighed sending declined applicants to private credit
The Wall Street Journal reported that Chase explored letting third parties approve applicants it declines for co-brand cards. A JPMorgan spokesperson said it has no plans for such a program.
Why it mattersA program like this would route large volumes of near-prime applicants to whoever funds them. Non-prime issuers would want to be among the bidders.
Bread renews Signet's jewelry card program
Bread Financial and Signet Jewelers (Kay, Zales, Jared) renewed their long-running card program on September 15.
Interchange is under pressure on three fronts
The White House is backing the Credit Card Competition Act
President Trump said in late September that the Marshall–Durbin bill (S. 3623) should pass "as soon as possible," and the White House repeated its support on October 8. No vote is scheduled, and merchants are looking for a must-pass bill to attach it to.
Why it mattersRequiring a second unaffiliated network would push credit interchange down. Low-balance non-prime portfolios rely on interchange more than most people assume.
The Visa/Mastercard settlement faces a fairness hearing on November 16
The amended merchant settlement cuts credit interchange by 10 basis points for five years, caps standard consumer card rates at 1.25% for eight years, and expands merchants' surcharging rights. About 1,000 merchants filed objections, and NACS plans to appeal if the court approves it.
Why it mattersThis is a direct revenue cut. Wider surcharging also makes paying by card more expensive for your customers at checkout.
Illinois interchange law: federal credit unions now exempt too
A federal judge on September 22 extended the injunction against the Interchange Fee Prohibition Act to federal credit unions. Illinois-chartered banks and state credit unions remain covered, and the law now takes effect in July 2027.
Big-bank earnings and inflation data, then the card issuers
- Mon Oct 12
- Columbus Day. Bond market closed; stocks open.
- Tue Oct 13
- Q3 earnings: JPMorgan, Wells Fargo, Citi. Listen for card loss guidance and comments on the lower-income consumer.
- Wed Oct 14
- September CPI, 8:30 ET (consensus ~3.6% y/y). Bank of America earnings. Fed Beige Book, 2:00 ET.
- Thu Oct 15
- September retail sales and PPI, 8:30 ET.
- Fri Oct 16
- Import/export prices.
- Mon Oct 19
- Concora TCPA settlement claims deadline.
- Tue Oct 20
- Synchrony (morning) and Capital One (after the close) Q3 earnings. First look at September card credit.
- Thu Oct 22
- Bread Financial Q3 earnings.
- Fri Oct 23
- American Express Q3 earnings.
- Oct 27–28
- FOMC meeting
- Oct 30
- OneMain Q3 earnings · CFPB card data comment deadline
- Nov 16
- Visa/Mastercard settlement fairness hearing
Know where you stand against your real peers.
This newsletter uses public data. Harbor's PRISM program gives sub-prime and near-prime issuers a confidential, anonymized monthly benchmark against comparable portfolios.