Money Matters: Credit Card Interest Rates

 

Credit card interest rates just reached a record high of 20.92% on average, according to WalletHub’s latest Credit Card Landscape Report. WalletHub also published the results of a new survey to show how consumers are handling the high-interest environment. You can find highlights from both reports below.
 
Credit Card Landscape Key Trends

• At 20.92%, the average credit card interest rate is higher than it has been at any point since the Federal Reserve started tracking this information in 1994. This will put even more pressure on consumers already burdened by inflation.
   
• The average interest rate for new credit card offers in Q1 2023 is 22.15%, up from 18.32% in Q1 2022.
   
• Interest rates on business credit cards have increased the most, rising by 24.75% year over year.

Full report: https://wallethub.com/edu/cc/credit-card-landscape-report/24927
 
Historical Credit Card Interest Rates Survey Key Findings

• 31% of Americans describe credit card interest rates as "crazy high.”
   
• 91% of people think credit card companies are greedy.
   
• 81% of people say the government should put a cap on how high credit card interest rates can get.
   
• 38% of Americans say credit card companies are responsible for record-high credit card interest rates.
   
• Nearly 4 in 5 Americans say they are less likely to apply for a new credit card due to higher credit card interest rates.
   
• 45% of Americans would give up sweets for a year to avoid paying interest on credit cards.

Full survey: https://wallethub.com/credit-cards#survey
 


Q&A with WalletHub
 
Why is the average credit card interest rate at a record high?

“The average credit card interest rate is at a record high in part because the Federal Reserve has been raising its target rate at a record pace and partly because credit card companies are insisting on adding a huge margin to already high rates,” said Jill Gonzalez, WalletHub analyst. “The prime rate has been higher than this before, but credit card companies didn’t add so much to it in the past.”
 
How do consumers feel about credit card interest rates right now?

“According to a new WalletHub survey, 31% of people characterize credit card interest rates as being ‘crazy high,’ and they are spot on. The average APR among existing credit card accounts is roughly 20.92% – higher than it’s been in nearly 30 years, and credit card rates are in another stratosphere compared to the rates we’re earning on deposits,” said Jill Gonzalez, WalletHub analyst. “Unsurprisingly, high rates are dampening consumer enthusiasm for new credit cards. Nearly 4 in 5 Americans say they are less likely to apply for a new credit card due to higher credit card interest rates.”
 
Do Americans blame anyone for high interest rates?

“Roughly 38% of Americans say credit card companies are responsible for record-high credit card interest rates, according to a new WalletHub survey, and 91% of people think credit card companies are greedy,” said Jill Gonzalez, WalletHub analyst. “Who are we looking to for help? The government. Around 81% of people think the government should put a cap on how high credit card interest rates can get.”
 
What would people do to avoid credit card interest charges? 

“People would do all sorts of things to avoid credit card interest charges. For example, 45% of people say they would give up sweets for a year to avoid interest, according to a new WalletHub survey, and 20% of people would move to a different country to avoid interest.,” said Jill Gonzalez, WalletHub analyst. “Instead, the best things you can do to avoid interest charges are to pay your credit card bill in full every month and use a card with a 0% introductory APR if you need to make a big-ticket purchase that will take a long time to pay off.”