What Happens to 1-3Y Treasury (SHY) When Credit Card Delinquency Exceeds 5%?
Credit card delinquency above 5% signals acute consumer stress. What happens to retailers, banks, and the consumer economy at these levels?
How 1-3Y Treasury (SHY) Responds
Scenario Background
Credit card delinquency rates measure the share of credit card balances that are 30 days or more past due. The long-run average is roughly 3-4%. Rates above 5% signal broad-based consumer financial stress: households are struggling to service revolving debt, and banks face rising charge-offs.
Read full scenario analysis →Historical Context
Credit card delinquency exceeded 5% during the early 1990s recession (peak 5.5% in 1991), 2001 recession aftermath (5.0% in 2003), and 2008-2010 (peak 6.8% in Q2 2009). The 2009 peak was the highest in the post-war era. The 2020 COVID episode saw delinquency spike briefly but fiscal support (stimulus checks, expanded unemployment) reversed it within months, never breaching 3%. The 2023-2025 period saw delinquency rise from post-COVID lows toward 4%, still below the 5% threshold but accelerating....
What to Watch For
- •Charge-off rates rising (leads the delinquency number by 1 quarter)
- •Senior Loan Officer Opinion Survey showing tightening consumer credit standards
- •Auto loan delinquency rising alongside card stress (broader consumer signal)
- •Unemployment rising above 5%
- •Personal savings rate falling below 3% (cushion depletion)
Other Assets When Credit Card Delinquency Exceeds 5%
Other Scenarios Affecting 1-3Y Treasury (SHY)
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