⚠ A Young Book Has a Short Credit RecordModerate threat

American Express (AXP) — threat to the moat

The cohort that will own Amex's moat in twenty years has not yet shown Amex how it pays its bills in a bad year.

Younger cardholders bring decades of potential fees, and they also bring less credit history than the customers Amex has known for years. The company now describes Millennial and Gen-Z Card Members as its "largest and fastest-growing cohort"1, and they took about 65% of new consumer accounts in the second quarter of 2026, by the company's account on its call2.

Net write-off rate, Card Member loans, principal only (%)2.2%20192.4%20200.9%20211.8%20232.2%20242.2%2025American Express Forms 10-K FY2021 and FY2025
Credit has been calm through the years the new cohort arrived.

Credit has been good so far. The net write-off rate on Card Member loans, principal only, was 2.2% in 2024 and 20253, and on loans and receivables for consumers and small businesses 2.0% in the second quarter of 20264.

But those figures come from a period of low unemployment. The last hard test, 2020, came when much of today's book did not yet exist. In that year Amex raised its reserve to 7.3% of loans from 2.7% at the end of 20195, and net income fell to $3,135 million6.

The concern is not that young customers are bad credits. It is that nobody, including Amex, yet knows how this cohort behaves in a recession, because most of it has not been through one as an Amex cardholder.

The company is still reporting better credit than it planned. According to a third-party summary of the second-quarter call, credit, retention and international premium growth all came in stronger than planned7. That is the right result for now; it is not yet a result through a cycle.

The company does not break out write-offs by age. The figure that would show trouble first is the principal write-off rate on consumer and small-business card balances; a rise from 2.0% toward 3% within a year, without a recession to explain it, would mean the new cohort was borrowing more than it could repay.

References
  1. ReportedThe company now describes Millennial and Gen-Z Card Members as its "largest and fastest-growing cohort", and they took about 65% of new consumer accounts in the second quarter of 2026, by the company's account on its call.
    American Express Form 10-Q for the quarter ended 30 June 2026 - capital return, held-for-sale cobrand portfolios, discount revenue drivers and the Millennial and Gen-Z cohort. — Q2 2026 · publ. 24 July 2026 · source ↗
  2. Third-party estimateThe company now describes Millennial and Gen-Z Card Members as its "largest and fastest-growing cohort", and they took about 65% of new consumer accounts in the second quarter of 2026, by the company's account on its call.
    American Express second-quarter 2026 earnings call transcript (third-party transcript). — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedThe net write-off rate on Card Member loans, principal only, was 2.2% in 2024 and 2025, and on loans and receivables for consumers and small businesses 2.0% in the second quarter of 2026.
    American Express Form 10-K for fiscal 2025 - card metrics: billed business, spending per card, cards-in-force, fees per card and network volumes. — FY2025 · publ. 6 February 2026 · source ↗
  4. ReportedThe net write-off rate on Card Member loans, principal only, was 2.2% in 2024 and 2025, and on loans and receivables for consumers and small businesses 2.0% in the second quarter of 2026.
    American Express second-quarter 2026 statistical supplement, Form 8-K exhibit 99.2 - segment results, card metrics, capital and credit - consolidated results, card metrics, capital and credit. — Q2 2026 · publ. 24 July 2026 · source ↗
  5. ReportedIn that year Amex raised its reserve to 7.3% of loans from 2.7% at the end of 2019, and net income fell to $3,135 million.
    American Express Form 10-K for fiscal 2021 - billed business 2019-2021, average discount rate, net write-off rates, the 2021 reserve release and Delta shares. — FY2021 · publ. February 2022 · source ↗
  6. ReportedIn that year Amex raised its reserve to 7.3% of loans from 2.7% at the end of 2019, and net income fell to $3,135 million.
    American Express Form 10-K for fiscal 2020 - the pandemic year: revenue, net income, ROE and Delta and cobrand shares. — FY2020 · publ. February 2021 · source ↗
  7. Third-party estimateAccording to a third-party summary of the second-quarter call, credit, retention and international premium growth all came in stronger than planned.
    American Express second-quarter 2026 earnings call transcript (third-party transcript). — Q2 2026 · publ. 24 July 2026 · source ↗
Sources
Generated September 28, 2026