Assessing American Express's Credit Risk and Consumer Resilience Amid Rising Delinquencies

In Q3 2025, American Express reported a net write-off rate of 1.9% for U.S. Consumer Card Member loans, a marginal improvement from 2.0% in prior months, according to an Investing.com report. For U.S. Small Business Card Member loans, the rate stood at 2.5%, down from 2.7% in July and August, according to that report. These figures, while slightly elevated compared to Amex's historically low 1.11% net charge-off rate in August 2023, are consistent with a broader trend identified in a S&P Global analysis, and they underscore a resilient performance relative to industry benchmarks. The broader U.S. credit card industry, however, faced a starkly different reality, with an average net charge-off rate of 4.31% in Q3 2025, per WalletHub data, nearly double the 1.80% average for the six major U.S. issuers noted in the S&P Global analysis. This divergence raises critical questions about American Express's credit risk profile and its implications for the financial sector's stability.

American Express: A Credit Quality Outlier

American Express's 1.9% write-off rate for consumer loans places it just above the 1.80% industry average for major banks but far below the broader sector's 4.31% benchmark reported by WalletHub. This gap reflects Amex's disciplined underwriting standards and its focus on high-net-worth customers, who typically exhibit stronger repayment capacity. For context, in August 2023, Amex's net charge-off rate was 1.11%, significantly lower than the 1.80% average for peers cited in the S&P Global analysis. The slight uptick in 2025-from 1.11% to 1.9%-aligns with broader economic pressures, including rising interest rates and inflation, yet Amex's performance remains robust.

The company's Small Business segment, while showing a 2.5% write-off rate in September 2025, also reflects cautious optimism. The decline from 2.7% in prior months suggests improved risk management or stabilizing small business cash flows, according to the Investing.com report. However, this rate remains higher than Amex's consumer segment, highlighting the inherent volatility in small business credit profiles.

Industry Benchmarks: A Tale of Two Averages

The discrepancy between the 1.80% average for major issuers and the 4.31% broader industry rate stems from structural differences in portfolio composition and risk exposure. Major banks like JPMorgan Chase and Bank of America, which dominate the 1.80% average, have shifted toward stricter underwriting and higher credit standards, as noted in the S&P Global analysis. In contrast, the broader 4.31% figure includes smaller banks and non-bank lenders, which have seen charge-off rates soar to 9.50% in Q4 2023 due to subprime account proliferation and weaker economic conditions, according to a PaymentsJournal analysis.

This bifurcation is further exacerbated by pricing strategies. Subprime accounts, which comprise a larger share of the broader industry's portfolio, often carry higher APRs and revolving balances, increasing both revenue and risk, as discussed in an ABA Banking Journal article. Meanwhile, Amex's reliance on premium customers-those with higher credit scores and income levels-limits its exposure to delinquencies. For instance, Amex's 30-day delinquency rate in August 2025 rose to 0.69%, still below pre-pandemic levels, according to a PYMNTS report, indicating that its customer base remains relatively insulated from systemic shocks.

Implications for Financial Sector Health

American Express's credit metrics suggest a sector where large, well-capitalized institutions are weathering macroeconomic headwinds better than smaller players. The broader industry's 4.31% charge-off rate, by contrast, signals fragility, particularly among smaller banks with limited liquidity buffers, a point highlighted in the PaymentsJournal analysis. This divergence has two key implications:

1. Credit Risk Concentration: As consumers increasingly turn to premium cards with better terms, the onus of credit risk shifts to smaller lenders. This could amplify systemic risks if subprime defaults spike, as seen in Q2 2024 when charge-offs hit a 14-year high, a trend outlined by PaymentsJournal.
2. Regulatory and Competitive Pressures: The Card Competition Act, aimed at curbing monopoly power in the credit card industry, may force Amex to adjust its pricing or risk losing market share. However, its strong credit quality provides flexibility to navigate such challenges without compromising profitability, as PaymentsJournal discusses.

For investors, Amex's 1.9% write-off rate is a double-edged sword. On one hand, it reinforces the company's reputation for prudent risk management, a critical differentiator in a sector grappling with rising delinquencies. On the other, the slight sequential increase from 1.11% in 2023 noted in the S&P Global analysis underscores the need to monitor macroeconomic trends, such as wage growth and unemployment, which could erode consumer resilience.

Conclusion

American Express's credit risk profile remains a standout in an otherwise turbulent sector. Its 1.9% net write-off rate, while modestly higher than historical lows, is a testament to its ability to balance growth with caution. However, the broader industry's struggles-exemplified by the 4.31% average-highlight the fragility of the financial ecosystem, particularly for smaller institutions. For investors, the key takeaway is clear: Amex's disciplined approach offers a hedge against sector-wide volatility, but its long-term success will depend on its ability to adapt to regulatory shifts and macroeconomic headwinds.