A new report shows that credit card interest rates are through the roof.
The average interest rate in October 2024 for new credit cards is at an all-time record of 23.04%, according to a WalletHub analysis of more than 1,500 credit card offers.
The report shows the average interest rate for new credit card offers was 23.15% in the third quarter of this year, up from 22.75% in the third quarter of 2023.
The average interest rate for existing accounts being assessed finance charges was 23.37%, up from 22.77% last year -- -- which means carrying a balance is more expensive than ever.
The report shows interest rates on store credit cards have increased the most, rising by 10.46% in the past year to reach a record average of 32.94%.
On top of that, credit card debt hit a new record high of $1.30 trillion in August. While that's 7% below the all-time record for the month, it's still roughly 3% higher than last year, according to WalletHub.
"Many Americans feel like they're in a very tough spot financially right now. Nearly 1 in 3 people say they can't afford to save money, according to WalletHub's new survey, and more than one-third of us are very stressed about credit card debt. Although lower interest rates will help to some extent, credit card debt hasn't left record-high territory," John Kiernan, WalletHub Editor, said in a statement.
While you can't do anything about rising interest rates, you can try to minimize the effects. Here are some suggestions from WalletHub:
1. Separate your everyday expenses from your debt. Nearly two-thirds of Americans charge everyday purchases to credit cards they carry debt on, which means every purchase accrues interest. That's a costly mistake. But if you use one card for ongoing debt and another for everyday purchases that you can pay off by the due date, the everyday purchases should never accrue interest charges.
2. Use a balance transfer deal to lower the cost of existing debt. The best balance transfer credit cards can give you a break from interest charges for as long as 21 months, and attractive offers are accessible to individuals with fair credit or better. A prolonged 0% introductory period can yield significant savings on interest, helping you get out of debt faster.
3. Work to improve your credit score. People with higher credit scores tend to pay lower interest rates. For example, the average APR among credit cards for people with fair credit is 27.19%, while the average for people with excellent credit is 18.26%. Having good or excellent credit also makes it easier to get credit cards with a 0% introductory APR.