Some records are meant to be broken, and the world cheers. Think about Jesse Owens and the 1935 Berlin Olympics with the 100-meter run. Or, Florence Joyner and the 200-meter in the ’88 Seoul Olympics. And even Babe Ruth with 714 home runs in 22 seasons.
But new records are less fun to observe when it comes to credit cards, mainly if you are a consumer navigating the latest inflation level or interest rate challenges.
Credit Card Rates are Surging
Today’s read comes from Bankrate, where the firm maintains a tracker on average consumer interest rates dating back to 1985. The record du jour: Current credit card interest rates hit 19.04%. According to their press release, the previous high was 19.00% in July 1991.
The numbers vary from the go-to site that Mercator follows, which is maintained by the Federal Reserve, but the perspectives are different. At the Fed, you will see data current through August 2022, where the rate assessed on all accounts hit a record high of 16.27% in August 2022, reported on October 7. This record-breaking number surpassed the previous record of 16.10% in May 1995. But things get worse. For accounts charged interest, which excludes those on zero-interest introductory offers, and payment workouts, the rate surged during the same period from 16.65% to 18.43%.
The interest issue all ties back to the household budget, which you can read about here. A thirty-year fixed mortgage is in the 8% range, plunging residential sales down to 603,000 units in September, according to the Census Bureau. A new car rate at BoA is now running close to 5%.
Breaking records is often fun to watch, but here you can feel the pain.
For me, I’d rather cheer Aaron Judge for his home run # 62, outpacing Roger Maris.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group.