The Fed slashed interest rates, but some credit card APRs aren’t going down. Here’s why.
Most credit cards have variable rates with direct connections to the Federal Reserve’s benchmark.
Most credit cards have variable rates with direct connections to the Federal Reserve’s benchmark.
It follows that credit card rates spiked along with the Fed’s string of 11 rate hikes starting in March 2022. The average annual percentage rate rose from 16.34% at that time to more than 20% today — near an all-time high.
But when the Fed started slashing interest rates in September, with an initial cut of half a percentage point, the average credit card interest rate fell by just 0.13%. The Fed has since cut rates by another quarter point.
For some retail credit cards, interest rates are still rising. The average retail card rate increased by more than a full percentage point over the past year, according to Bankrate.
Now, the average interest rate on a store card is at an all-time high just ahead of the holiday shopping season, nearing 31%, according to a separate LendingTree study.
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