WalletHub, Financial Company
Credit card interest rates are not going down. The interest rate on the average credit card account has gone up from 11.82% in 2014 to 15.1% in 2019 – right around a 20-year high. And the average APR among new credit card offers is now above 19%, having climbed steadily in recent years.
Credit card rates are still going up even though the Federal Reserve is now cutting its target interest rate. That’s because credit card interest rates are determined by a market rate, plus a margin that’s set by card issuers. And those margins are going up for new offers.
The August 2019 average margin was 11.72%, a percentage point higher than 2017’s 10.6% margin, and also the highest margin on record. Credit card companies don’t want their rates to fall just because the Fed decides to discount its target. Plus, high credit card rates help support all the extra rewards and perks offered by credit card companies these days.
If you don’t want to deal with rising interest rates from credit card companies, you have options. For instance, you can avoid interest charges completely by paying your credit card balance in full every month. If you already have a balance that you can’t afford to pay off right away, consider looking for a 0% APR balance transfer credit card. It could give you a break on paying interest and help you pay down your debt faster.
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