According to a recent study by Bankrate.com, average credit card rates are at their highest in decades.
A Bankrate.com study on Wednesday found the average credit card rate hit a record high of 17.96%. According to Bankrate.com, the rate is up 3.5% from about a month ago, and he’s up 10.8% from 16.21% about a year ago.
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Average interest rates hit their highest level since 1996 on Wednesday, according to Bankrate.com.
“Federal Reserve Chairman Jerome Powell has revealed that the Fed has yet to finish raising rates,” Bankrate.com senior industry analyst Ted Rothman said in a statement.
Federal Reserve Chairman Jerome Powell said in a speech last week that the Fed would continue to take steps to bring blistering inflation closer to its 2% target.
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“Almost all credit cards have floating rates that track the prime rate, which is 3 percent higher than the federal funds rate set by the Federal Reserve,” Rothman added. “So there is a direct pass-through from the Fed’s actions to credit cardholders.”
The Fed approved two consecutive 75 basis point hikes in June and July. Officials have suggested another rate hike is likely in the second half of September, and according to CME Group’s FedWatch tool, many traders believe the Fed will raise his We expect a 75 basis point rate hike.
“Most credit cardholders now face rates that are 225 basis points higher than they were just six months ago, as rate hikes typically impact new and existing balances,” Rothman said. “These rate hikes have a significant cumulative effect.”
Rothman suggests that best practice is to “pay more than the minimum amount” each month to avoid building up your credit card balance.
“Pay it all if you can,” Rothman said. “If that’s not possible, forget chasing rewards and ask for the lowest possible interest rate. We have his 0% balance transfer offer that lasts 21 months.”
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Credit card debt held by U.S. households increased 13% on an annualized basis in the second quarter of 2022, according to the Federal Reserve Bank of New York’s quarterly report on household debt and credit released in early August. . This increase marked the sharpest increase since 1999.