The average annual percentage rates APR for new credit cards have reached a new record high. In June, the average bank card borrowing rate in America increased to around 20%, a rise of about 6% compared to the average credit card rate of 14.87% in the United States in June.
Credit card interest rates are the highest they've ever been. I have been watching credit card rates on a monthly basis for more than a decade. And it is the highest since I have been tracking them, Matt Schulz, LendingTree TREE chief credit analyst, told Yahoo Finance Live video above Schulz that consumer borrowing costs could continue to rise. He said that we are nowhere near where the top is going to be.
3 interest rate hikes by the Federal ReserveFederal Reserve in recent months have resulted in an increase in inflation. In June, the Fed increased rates by 75 basis points in mid-June, an aggressive move that put the federal funds rate at 1.75%, up from zero in March 2020.
America s credit card balance rose to $840 billion in the first three months of 2022, according to data released by the Federal Reserve BankFederal Reserve Bank of New York on May 10. Since 1999, the increase in credit card debt is in line with the steady upward trend of the national credit card debt. Schulz pointed out that this is not likely to change as debt growth is expected to continue even as money becomes more expensive.
He said that we are seeing increased card debt. The only time that we have seen real decreases in credit card debt since the Fed began tracking credit card debt in the 60 s is in times of great economic crisis, like the beginning of the Pandemic. Schulz suggested borrowers take advantage of balance transfers to negotiate with their lenders for lower interest rates and lower interest rates, which could be a good idea for consumers feeling the pinch.
In an April Lending Tree poll, about 70% of people who asked for a lower interest rate on their credit cards in the past year were successful, Schulz said. He added that it shows that it's not just people with 800 credit scores who are getting their way.
The odds of getting lower APR from lenders has dipped in recent months compared to previous years, but it's worth it. The average reduction that people reported was seven percentage points. That is a significant decrease. It is absolutely worth it.