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Credit Card APRs Surge to Record Highs — Even Without Fed Rate Hikes

Although the Federal Reserve has held its benchmark federal funds rate steady since December 2024, credit card interest rates continue to march higher, creating growing pressure for American consumers. According to LendingTree’s June 2025 report, credit card APRs have now increased for three consecutive months, reaching the highest level since late 2023.

The average annual percentage rate (APR) for all credit cards now exceeds 20%, as reported by Bankrate. For new applicants, the situation is even worse — LendingTree data shows that new card offers average an APR of 24.3%, a level unseen in decades. In some cases, premium rewards cards and cards for subprime borrowers are offering rates exceeding 29%.

“These are crushing rates that can make even modest balances snowball into unmanageable debt,” warns Clifford Cornell, a certified financial planner at Bone Fide Wealth in New York City.

How We Got Here: A Decade of Rising Rates

The Credit CARD Act of 2009 originally helped stabilize rates for years, but that stability began eroding when the Fed started hiking its benchmark rate in 2015. Over the past decade, credit card APRs have effectively doubled — from around 12% in 2015 to over 24% today for many borrowers.

Historically, most credit cards come with variable interest rates directly tied to the Federal Reserve’s prime rate. So when the Fed embarked on an aggressive series of 11 rate hikes beginning in March 2022 — lifting its benchmark rate from near zero to over 5% — credit card rates followed suit.

Even after three rate cuts in 2024, bringing the Fed’s target rate down to a range of 4.5% to 4.75%, card issuers have continued increasing APRs.

“This unfortunate upward trend could continue in coming months,” says Matt Schulz, chief credit analyst at LendingTree. “Credit card companies are adjusting not just for the Fed’s moves, but for broader economic uncertainties.”

Why Credit Card APRs Keep Rising Even When the Fed Pauses

The key reason credit card APRs are still rising? Growing concerns about consumer creditworthiness.

“Card issuers are pricing in higher risk,” Schulz explains. As inflation remains elevated — with May 2025 CPI data showing a 3.2% year-over-year increase — and household debt levels rising, lenders are increasingly cautious about potential defaults.

Total credit card debt in the U.S. surpassed $1.28 trillion in Q2 2025, according to the Federal Reserve Bank of New York. Delinquencies are also ticking up: more than 7.5% of cardholders are now 30+ days late on payments, compared to just 4.1% two years ago.

“This is a sign of banks trying to shield themselves against potential losses as more borrowers struggle with their payments,” Schulz says.

Charlie Wise, SVP of global research at TransUnion, adds another layer: “When economic uncertainty grows, many consumers proactively seek additional credit lines as a financial safety net. That higher demand, combined with higher risk, gives issuers the leverage to push APRs even higher.”

Wise explains that as more balances shift into the hands of riskier borrowers, the weighted average APR naturally trends upward. “The risk premium lenders demand is growing — even if the Fed stays on hold.”

Why Borrowers May See Little Relief Even If the Fed Cuts Rates Again

For many borrowers, a potential future Fed rate cut may bring only marginal relief. Because credit card APRs are already so high, even a significant reduction in the federal funds rate might have limited impact on the actual interest consumers pay.

“Dropping the Fed rate by 200 basis points might lower your APR from 22% to 20%,” Wise notes. “It’s a difference, but not one that meaningfully changes the monthly payment for most borrowers.”

What Consumers Can Do to Protect Themselves

While many Americans feel trapped by rising rates, experts stress that consumers often have more options than they realize — especially those with solid credit histories.

“People have more power over the rates they pay than they think they do,” says Schulz. Here are some strategies experts recommend:

1. Leverage Balance Transfer Offers

Many issuers continue to offer zero-interest balance transfer cards, sometimes with 12 to 18 months of no interest. This can provide a crucial window to aggressively pay down balances.

2. Consider Personal Loan Consolidation

For borrowers with good credit scores, personal loans offer rates significantly lower than most credit cards — averaging around 11% to 13% in mid-2025, according to LendingTree. Rolling credit card balances into a lower-rate loan can dramatically cut interest costs.

3. Negotiate Directly With Issuers

Consumers can call their card issuer and request a lower APR, especially if they have a strong payment history. Issuers may be more willing to negotiate than many borrowers assume.

4. Maintain Healthy Credit Habits

Cardholders who pay in full every month, stay below 30% utilization, and avoid late payments will not only avoid interest charges but also build higher credit scores — opening the door to better offers in the future.

5. Monitor Your Credit Profile

Regularly checking your credit reports (free at AnnualCreditReport.com) allows you to spot errors and take proactive steps to improve your creditworthiness, which directly influences the rates you’re offered.

The Bottom Line: A Growing Financial Burden

As of mid-2025, credit card debt is growing faster than wages for many American households. The latest Bureau of Labor Statistics data shows real wage growth has stagnated, while revolving consumer debt is expanding at an annualized rate of over 9%.

For many families, these rising credit card APRs are compounding already difficult financial pressures caused by higher living costs, persistent inflation, and an uncertain job market.

Unless the Fed aggressively cuts rates — and card issuers follow — it’s likely that average APRs will remain stubbornly high through the rest of 2025. In the meantime, experts emphasize that individual financial discipline and proactive debt management remain the most effective tools for consumers facing today’s credit card landscape.