"Record High Credit Card Interest Rates: What Consumers Should Know"
Originally Published 1 year ago — by CNBC
The Consumer Financial Protection Bureau (CFPB) has reported that credit card interest rates have reached record highs, with the average consumer paying a 22.8% interest rate on their credit card balance at the end of 2023, the highest since 1994. The analysis attributes the increase to a rise in the average "APR margin," which is the difference between the total APR and the "prime rate," leading to higher profits for card issuers. The CFPB questions whether these higher profits are justified, as the share of consumers with "subprime" credit scores holding credit cards has remained relatively stable. Industry concentration and credit card delinquencies may also be contributing factors. Consumers are advised to pay credit card bills on time and in full each month to avoid paying interest, and those with good credit may consider transferring balances to cards with 0% APR introductory offers.