Assessing Credit Risk in the Premium Credit Card Sector: American Express's 2.0% Net Write-Off Rate as a Leading Indicator of Consumer Financial Health

The premium credit card sector remains a critical barometer for assessing consumer financial health, particularly in an era of macroeconomic uncertainty. American Express (AXP), a leader in this space, has long been scrutinized for its Net Write-Off Rate (NWOR), a metric that quantifies the proportion of unpaid balances relative to total credit card receivables. As of June 2025, Amex reported a 2.1% NWOR for U.S. Consumer Card Member loans, a figure consistent with May's performance and underscoring its resilience amid broader economic headwinds, [axp-20250616 - SEC.gov]^[1], [American Express reports June card loan delinquency and write …]^[2]. While the user's prompt references a 2.0% figure, the publicly available data suggests a slight variance—likely due to rounding conventions or timing differences in reporting. Regardless, Amex's NWOR remains a compelling indicator of consumer stability and risk management efficacy.

A Benchmark for Credit Resilience

American Express's NWOR of 2.1% in June 2025 places it well below industry averages, which typically hover around 3.5% for major credit card issuers, [American Express reports June card loan delinquency and write …]^[2]. This performance is particularly notable given the 11% year-over-year increase in provisions for credit losses, driven by macroeconomic pessimism and loan growth, [American Express reports June card loan delinquency and write …]^[2]. The decoupling of rising provisions from stable write-off rates highlights Amex's proactive risk management strategies, including dynamic reserve builds and stringent underwriting standards. For context, the company's U.S. Small Business Card Member loans saw a marginally higher NWOR of 2.6% in June, up from 2.4% in May, [American Express reports June card loan delinquency and write …]^[2], reflecting sector-specific vulnerabilities but still outperforming broader market trends.

The Premium Customer Advantage

Amex's ability to maintain low delinquency rates stems from its unique positioning in the premium credit card market. Its customer base—comprising high-income, high-credit-quality individuals—demonstrates greater financial resilience during downturns. According to a report by the SEC, Amex's total U.S. Consumer and Small Business Card Member loans held for investment reached $122.7 billion as of June 30, 2025, [American Express reports June card loan delinquency and write …]^[2], a testament to its expanding portfolio while preserving credit quality. This duality—growth without significant risk degradation—positions Amex as a bellwether for consumer confidence. Even as inflationary pressures persist, its clients' capacity to service debt remains robust, a trend mirrored in its delinquency rates, which have remained stable at 0.8% for U.S. Consumer accounts, [American Express reports June card loan delinquency and write …]^[2].

Implications for Investors

For investors, Amex's NWOR serves as a dual-purpose metric: a gauge of its own operational health and a proxy for broader consumer behavior. The company's disciplined approach to credit risk—evidenced by its “best-in-class” performance—suggests that it is well-positioned to navigate potential recessions. However, the slight uptick in Small Business write-offs warrants caution, as this segment may face sharper margin pressures in a high-interest-rate environment.

In the long term, Amex's NWOR trajectory will be critical for assessing the sustainability of its premium model. If macroeconomic conditions deteriorate further, even its high-quality customers could face strain. Conversely, a stabilization or decline in the NWOR would reinforce confidence in the sector's resilience.

Conclusion

American Express's 2.1% NWOR in Q2 2025 reaffirms its leadership in credit risk management within the premium credit card sector. While the figure deviates slightly from the 2.0% cited in some analyses, its consistency and comparative strength against industry benchmarks underscore its value as a leading indicator. For investors, this metric not only reflects Amex's operational discipline but also offers insights into the broader health of consumer finances—a critical consideration in an era of economic uncertainty.