For the past two years, the highest-priority leadership meetings centered on the top of the K-shaped recovery: premium refreshes, airport lounge expansion, rising annual fees, and resilient affluent spend.
We are finally seeing the expansion of credit, which arguably is “late cycle,” where the credit cycle expands, and the lower K products start outperforming. Q2 2026 finally confirmed this trend, and I think this is just the beginning.
Subprime and deep subprime captured 21% of new US credit cards last year; their largest market share since 2007. We are already on pace to exceed historic levels by EOY.
Subprime card direct mail volume grew 52% between Q1 2024 and Q1 2026. Near-prime grew 36%. Prime and super-prime each grew about 20%.
Issuers funded the top of the market and added money at the bottom about twice as fast.
Subprime is now 10.6% of card direct mail volume, its highest share in more than 3 years. Near-prime is 7.8%. Together, the 2 lower bands are 18.4% of the mailbox.
The 6 largest issuers sent 43.7% of subprime card mail in 2023. In the first half of 2026, they sent 24.9%.
Specialists filled the space. WebBank (Avant, Mission Lane, OneMain, Oportun, Petal, etc.), Merrick Bank, Credit One Bank, The Bank of Missouri, and Celtic Bank all increased volume over the period. Capital One Platinum remains the single largest subprime product in the mailbox.
The reference points have changed. National issuers once anchored the segment, so every subprime product competed against a no-fee card from a household name. Those products now compete against each other. Specialists set the standard customers see.
US consumers who applied for a card in Q2 named the channel that delivered the offer. Industry-wide, answers spanned 8 channels. The bank website or app ranked first at 22.2%. Direct Mail ranks second at 17.1%.
Subprime follows a different pattern. Direct mail accounts for close to all measured marketing spend behind the 8 largest subprime cards. The mailbox therefore delivers the product story, the price, and the approval signal in a single piece.
Subprime consumers shop for a yes rather than for the best card.
An annual fee with no rewards is the most common subprime offer structure at 33.9% of volume, up from 27.5% in 2024. The most consumer-friendly structure, no annual fee with rewards, also grew, from 13.8% to 16.9%.
Both ends gained share, and the middle lost it. Issuers now know enough about the recipient to price 2 very different offers into the same band.
Credit limits follow the same pattern. Most subprime cards cluster around a $300 minimum line, while advertised maximums reach $4,000 and above. The products earning attention promise a guaranteed limit rather than a possible one. Merrick Bank names the increase in the product. Indigo prints a guaranteed limit on the envelope.
The Federal Reserve has surveyed banks on card lending standards every quarter since 1996. Standards were loosest in Q2 2007. Card losses peaked in Q4 2009 at 10.54%. Standards were loosest again in Q3 2021. Losses peaked in Q3 2024 at 4.64%.
The 1990s followed the same sequence. Willingness to lend peaked in Q1 1994. Losses peaked in Q3 1997 at 5.49%.
This expansion differs from the last 2 in exposure and in underwriting.
Exposure. Subprime was 21.0% of new accounts last year and 2.87% of new credit lines. In 2021, the account share was 20.6%, and the line share was 3.76%. In 2007, the line share was 3.3%. The average new subprime line in March 2026 was $950. Across all new cards, it was $6,209.
Underwriting. In Q2 2007, banks were easing card standards. In Q3 2021, they eased sharply. In Q3 2026, they remain net tight at plus 6.7. Losses have improved for 6 consecutive quarters.
I expect subprime share to keep rising through 2027. Small credit lines make that growth affordable.
The outcome depends on the subprime share of new credit lines. It is 2.87% today. It exceeded 3.4% before each of the last 2 turns.
Subprime is now a permanent segment. It holds its largest share of new cards since 2007, at an average opening line of $950. The credit line is the metric to watch.
