NBC reports that the cost of credit card debt is now the highest it's been in over 30 years, with average interest rates up to 19.04%.
"Bankrate has been surveying credit card rates since 1985, and this eclipses the previous all-time high of 19.00% from July 1991." Greg McBride, Bankrate chief financial analyst, via NBC.
The new all-time high comes as the Federal Reserve has made its largest key federal funds rate hike
in over a decade in an effort to combat inflation.
NBC reports that the Fed's plan is to raise the cost of borrowing in hopes that it will slow the economy and ease rising prices.
This has ratcheted the prime rate up to 7%, which is what banks charge the most creditworthy customers.
The prime rate is also used to determine the final annual percentage rate for a credit card.
According to Bankrate, someone paying the minimum payment on a $5,000 credit card debt would pay over $6,000 in interest over 15 years.
"You don’t feel it on a monthly basis, but minimum payments are a trap. If you as an individual have credit card debt with an interest rate near 20%, that needs to be priority — it's three, four, five times
higher than other forms of debt."Ted Rossman, Bankrate Senior Industry Analyst, via NBC
"Bankrate has been surveying credit card rates since 1985, and this eclipses the previous all-time high of 19.00% from July 1991." Greg McBride, Bankrate chief financial analyst, via NBC.
The new all-time high comes as the Federal Reserve has made its largest key federal funds rate hike
in over a decade in an effort to combat inflation.
NBC reports that the Fed's plan is to raise the cost of borrowing in hopes that it will slow the economy and ease rising prices.
This has ratcheted the prime rate up to 7%, which is what banks charge the most creditworthy customers.
The prime rate is also used to determine the final annual percentage rate for a credit card.
According to Bankrate, someone paying the minimum payment on a $5,000 credit card debt would pay over $6,000 in interest over 15 years.
"You don’t feel it on a monthly basis, but minimum payments are a trap. If you as an individual have credit card debt with an interest rate near 20%, that needs to be priority — it's three, four, five times
higher than other forms of debt."Ted Rossman, Bankrate Senior Industry Analyst, via NBC
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