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  • Writer's pictureBob Brooks

Watch Out For Credit Card Interest Rates

As most of you know, the Federal Reserve has been increasing interest rates in order to control inflation. Of course, this can affect the stock market, the bond market, the economy, mortgage rates, etc. It also affects your credit card’s interest rates. Credit card companies benefit from those interest rate rises. They get to charge more interest, and to their benefit, consumers don’t pay attention to these changes in their credit card rates.

According to, the average interest rate is now 15.13%. The average interest rate if you are holding a balance is 16.65%. YIKES! They can and will go higher at this rate. There are a few things you need to be careful of as credit card companies are willing to give out new credit lines.

New Card Offers

According to, new credit card offers are averaging 20.82%. Take my word for it – at a 20% interest rate, it takes a long time to pay off debt! Usually, they give you a range of interest rates, and you get the interest rate based on your credit. What are the chances that they are going to view your credit as being worse off than your score indicates? Be careful if you are going to transfer a credit card balance to a new card through a 0% offer. Although your current interest rate is high, you might be transferring that balance over to a higher interest rate than your current rate.

Card Offers on Current Cards

I recently saw an offer for a Discover card. Of course, they made it sound like such a good deal. Here is the deal:

0% for 9 months on a balance transfer to your current Discover Card. Here is what they don’t want you to catch. They charge you 6% for transferring that money; after that 0% free period, your rate goes up to 14.95%. So, your REAL cost of that transferred debt for the first year (including that “free” 9 months) is roughly 6.3%, then year 2 and on 14% plus!

Bottom line – it is just going to get more expensive to hold debt with a rising interest rate environment. To make it worse, the credit card companies are the equivalent to drug dealers as they distribute the drug to whoever will use it and pay the minimum payments. They entice consumers with the appearance of good deals. What seems like an innocent and harmless way to make a purchase can turn into a bad financial decision.


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