The Federal Reserve recently held interest rates steady, but credit card interest rates are still very high and will likely remain so for the foreseeable future. [1][2][3]
When the Fed raises its benchmark federal funds rate, it increases interest rates on consumer borrowing products like credit cards. This is because credit card APRs are directly tied to the prime rate, which moves with the federal funds rate. [2][3]
The average credit card APR is around 22.75%, which is near an all-time high. [2][3] Even though the Fed has paused rate hikes for now, credit card rates are expected to stay elevated as the central bank signals it will maintain higher rates to combat persistent inflation. [1][2]
Consumers with credit card balances will likely have high-interest charges. Experts recommend paying down high-interest credit card debt as quickly as possible or considering a balance transfer card or personal loan with a lower rate. [1][2][4]
In summary, while the Fed has temporarily halted rate increases, credit card APRs remain historically elevated and will likely stay that way until the central bank is confident inflation is under control. Consumers should take steps to minimize the impact of these high rates on their finances. [1][2][3][4]
Citations:
[1] https://www.cnet.com/personal-finance/credit-cards/advice/what-the-feds-vote-on-interest-rates-means-for-your-credit-cards/
[2] https://fortune.com/recommends/credit-cards/how-feds-rates-impact-credit-cards/
[3] https://www.fool.com/the-ascent/federal-reserve-interest-rates/
[4] https://www.bankrate.com/banking/federal-reserve/fed-interest-rate-decision-biggest-winners/
[5] https://www.cnbc.com/select/how-credit-apr-is-affected-when-fed-raises-interest-rates/