Credit Card Interest Rates Now At Highest Rates- Ever!

As the holidays are upon us, credit card users are warned of what credit lines to stay away from.

Credit cards have skyrocketed their interest rates, with some retail cards now holding rates at over 30%. Experts are warning shoppers ahead of the holiday season of the rising standard.

Bankrate confirmed the record high-interest rate on Oct. 23, with the current average APR of 28.93%, increasing from 26.72% in 2022. On the other hand, the average rate for traditional credit cards not solely for any particular store is averaging a lesser amount, 21.19% to be exact.

Given this information, the financial news outlet urges shoppers to stay away from retail cards, despite the incentives behind opening the credit lines, due to the overarching concern of interest rates. Bankrate’s senior industry analyst, Ted Rossman, expressed how 30% was a typical ceiling that has now been shattered.

“We used to see 30% as the high end for retail credit card APRs,” says Rossman. “In fact, 29.99% was an artificial barrier that few dared to cross — for psychological reasons, mostly. But the market has blown past that threshold given the Fed’s aggressive series of interest rate hikes over the past year and a half.”

Rossman continued, stating how many of these store credit lines have entered subprime territory, even for those with an excellent credit report.

“Many retail credit cards now charge all of their balance-carrying customers rates in line with what we used to think of as figures reserved solely for a deep subprime audience,” shared the analyst.

While not all store-issued cards are following the trend of hefty APRs, such as the Amazon Secured Card with a 10% rate, the issuance of putting a deposit down for the amount on the credit line does not provide much benefit to cash-strapped users.

While Amazon’s card, in addition to Target and Best Buy, gives users 5% cash back on purchases, the pros may not outweigh the lofty APRs if one cannot pay the balance off in time. As the holidays approach, shoppers preparing to buy gifts must consider the latest factors that could lead to a costly Christmas season if not informed.

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