Credit card interest rates are already as high as they’ve been in decades. While the Fed is taking its foot off the gas a bit when it comes to raising rates, credit card APRs almost certainly will keep climbing for at least the next few months, so it is important that cardholders continue to focus on knocking down their debt.
The average interest rate on a new credit card offer today is 23.39%, the highest since LendingTree began tracking rates in 2019. The average card comes with a possible APR range of 19.88% to 26.89%. That means that even if you have the best credit, you still may be looking at an APR of about 20% the next time you apply for a card.
The average interest rate on a credit card that accrued interest, meaning one that carried a balance, in Q4 of 2022 was 20.40%, according to the Fed. That’s up nearly 2 full percentage points from the previous quarter (18.43%), which was the highest since tracking began in 1994. This is the rate that really matters because these are the people who are carrying a balance.
Cardholders do have options, though. Zero-percent balance transfer credit card offers are even more plentiful than they were a year ago and remain one of the best weapons Americans have in the battle against credit card debt. Low-interest personal loans may be an option as well. The rates on new personal loan offers have climbed recently as well, but if you have good credit, you may be able to find options that feature lower rates that what you currently have on your credit card.
Economic and Housing Market Impact by Jacob Channel
This may be the Fed’s last hike for a while, especially if the economy continues to show significant signs of slowing down in February. With that said, one more hike in March isn’t out of the question.
Though they are falling, mortgage rates are still at a more than 10-year high. You’d have to go back to 2008 to see the average rate for 30-year, fixed mortgages above 6%. These relatively high rates, combined with persistently high home prices, mean that buying a home is still a challenge for many.
Ultimately, mortgage rates are coming down. Despite this, it’s important not to lose sight of the forest for the trees and assume that falling rates will totally alleviate all of the issues plaguing today’s housing market. Unfortunately, many (if not most) of those who were struggling to afford a home at a 7.08% rate are likely going to continue to struggle to afford a home at a 6.13% interest rate. We’re still a ways away from the housing market being truly affordable, even if it has recently become a bit less expensive.
