Americans are increasingly struggling to manage their credit card bills, primarily due to soaring interest rates that have risen sharply since the Federal Reserve began its series of rate hikes in March 2022. The average annual percentage rate (APR) on credit cards has jumped from 16.34% to over 20%, nearing historical highs. Although there was a slight reduction in rates following the Fed's recent half-point cut on September 18, the decrease has been minimal, with the average credit card interest rate falling by only 0.13%. A survey by CardRatings.com revealed that only 37% of credit cards adjusted their rates in response to the Fed's cut, indicating a cautious approach from credit card companies. This reluctance stems from the perception that rate cuts often coincide with economic slowdowns, making lending riskier. As a result, many Americans are left grappling with high-interest debt, with a significant portion still paying off holiday expenses from the previous year.
Read the full article here.