The average credit card interest rate is at an all-time high. If you have credit card debt you’re probably wondering if your interest rate is going to go up.
Here’s what you need to know about credit card interest rates and how they may be changing in the near future.
What is the average credit card interest rate?
According to the Federal Reserve the average credit card interest rate is about 17%. This is the highest average credit card rate in history.
What is the prime rate?
The prime rate is the interest rate that banks charge their best customers. It’s used as a benchmark for other interest rates.
The prime rate is currently 3.25%. That’s up from 3% in December 2015.
What is the federal funds rate?
The federal funds rate is the interest rate that banks charge each other for overnight loans.
The federal funds rate is currently 2.5%. That’s up from 0.25% in December 2015.
What does this mean for your credit card interest rate?
Your credit card interest rate is directly affected by both the prime rate and the federal funds rate.
When the prime rate goes up your credit card interest rate will usually go up as well.
The same is true for the federal funds rate. As the federal funds rate increases so does the average credit card interest rate.
How much will my interest rate go up?
It depends on your credit card issuer. Some credit card issuers may raise your interest rate by the full amount of the prime rate or federal funds rate increase.
Other credit card issuers may only raise your interest rate partially. And some credit card issuers may not raise your interest rate at all.
If you’re worried about a potential interest rate increase contact your credit card issuer and ask if they have any plans to raise rates.
What can you do to avoid a higher interest rate?
There are a few things you can do to avoid paying a higher interest rate on your credit card debt.
One option is to transfer your balance to a 0% APR credit card. This will give you a period of time (usually 12 to 21 months) where you won’t have to pay any interest on your balance.
Another option is to negotiate with your credit card issuer. If you have good credit you may be able to get a lower interest rate by asking your issuer for a rate reduction.
Finally you can always pay off your credit card debt as quickly as possible. The faster you pay off your debt the less interest you’ll ultimately pay.
What’s the bottom line?
Credit card interest rates are at an all-time high. If you have credit card debt there’s a good chance your interest rate will go up in the near future.
You can avoid a higher interest rate by transferring your balance to a 0% APR credit card negotiating with your issuer or paying off your debt as quickly as possible.
Are credit card rates going up?
Yes credit card rates are going up.
Why are credit card rates going up?
Credit card rates are going up because the Federal Reserve is raising interest rates.
How will rising credit card rates impact consumers?
Rising credit card rates will impact consumers by making it more expensive to carry a balance on their credit cards.
What can consumers do to avoid paying more interest on their credit cards?
Consumers can avoid paying more interest on their credit cards by paying off their balances in full each month.
Will all credit card rates go up?
Yes all credit card rates will go up when the Federal Reserve raises interest rates.
How much will credit card rates go up?
Credit card rates will go up by the same amount as the Federal Reserve’s interest rate increase.
When will credit card rates go up?
Credit card rates will go up when the Federal Reserve raises interest rates.
How often do credit card rates go up?
Credit card rates go up whenever the Federal Reserve raises interest rates.
What else impacts credit card rates?
In addition to the Federal Reserve’s interest rate decisions credit card rates can also be impacted by changes in the prime rate.
Will rising credit card rates impact all consumers equally?
No rising credit card rates will impact consumers with variable rate credit cards to a greater extent than those with fixed rate credit cards.
How can consumers find out what interest rate they’re paying on their credit cards?
Consumers can find out what interest rate they’re paying on their credit cards by looking at their credit card statements.
How can consumers find out if their credit card rates have gone up?
Consumers can find out if their credit card rates have gone up by looking at their credit card statements or contacting their credit card issuers.
What should consumers do if they’re carrying a balance on their credit cards?
If consumers are carrying a balance on their credit cards they should try to pay it off as quickly as possible to avoid paying more interest.
What should consumers do if they’re having trouble making their credit card payments?
Consumers who are having trouble making their credit card payments should contact their credit card issuers to discuss their options.
What other options do consumers have if they’re having trouble making their credit card payments?
Consumers who are having trouble making their credit card payments can also consider transferring their balance to a low-interest credit card or taking out a personal loan.
