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Credit Card Annual Percentage Rates Hit 20-Year High

Checking the APR on all your cards may be incentive to pay them off

A businessman pulls on a rope attached to an arrow that represents rising interest rates

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En español | The average credit card annual percentage rate (APR) climbed to 17.08 percent this week, the highest number in more than 20 years.

If your credit card’s APR is variable — as most in the U.S. are — now is the time to look at your credit card rates to determine what it really means for your finances. The average maximum APR is now at 24.45 percent. Meanwhile, the average median card APR has climbed to 20.77 percent, according to creditcards.com.

As APRs climb, interest payments on card balances also will rise. Checking the APR on every card in your wallet may be just the incentive that credit card holders need to pay off balances or, at least, not add to them.

“As interest rates continue to rise, it becomes even more important to get out from under credit card debt,” said Patrick Daniels, director of financial planning at Precedent Asset Management, Indianapolis. “If the credit card balance is large, the interest charges may be more than what a person can afford to pay each month. The problem only compounds from there.”


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The Federal Reserve has raised interest rates three times in the past year, which affects the prime rate. The prime rate is the base rate posted by 70 percent of the nation’s largest banks. A credit card’s APR is typically determined by using the prime rate plus a percentage that the credit card issuer chooses. So, if the prime rate is 5.25, a credit card issuer can charge a rate of 5.25 plus, say, 11.99 percent for an APR of 17.24 percent.

Credit card companies can raise your interest rate but must give you at least 45 days’ notice if they change any of your key credit card terms. According to bankrate.com, credit card interest is charged daily and based on your credit card balance. Of course, the greater your balance and the higher your APR, the more interest is added to your credit card balance.

If you don’t pay your balance in full each month, the credit card company typically charges interest not only on the balance you are carrying but on purchases from the day you make them. If you continue to carry a balance, interest compounds in the months and years ahead.

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