The average interest rate for new credit card offers has reached 22.75%, its highest level in 30 years, according to a new report by WalletHub.
The personal finance website on Friday released its analysis of new Federal Reserve data, which shows that record-high credit card interest rates are costing consumers more than $163 billion in interest on an annual basis.
Interest rates on credit cards rose the most for people with excellent credit, with an 18% increase over the past year, according to the report. Interest rates for consumers with fair credit rose only 10%.
“The average interest rate on new credit card offers has gone up by more than 12% in the past year alone, forced higher by Fed rate hikes in support of the fight against inflation,” said WalletHub CEO Odysseas Papadimitriou. “Fortunately, the Fed is expected to start cutting its target rate next year, which should provide some interest-rate relief for people with credit card debt.”
U.S. consumers had racked up $1.23 trillion in credit card debt as of last month, even after adjusting for inflation that is 10% lower than the record for August but still 7% higher than a year ago, according to WalletHub.
The website also conducted what it said was a nationally representative online survey of over 250 respondents, which found that 56% of Americans describe the current average interest rate as “crazy high,” and almost half believe 10% would be the maximum interest rate they would consider reasonable for a credit card.
Eighty-six percent of respondents said the government should put a cap on credit card interest rates.
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