Credit card rates remain stubbornly high at 24.20% despite the CFPB rule’s elimination. Why? Simple market dynamics tell the story. Banks are riding high on record profits while consumers drown in $1.21 trillion of debt. Inflation, Federal Reserve policies, and hefty operating costs all play their part. But here’s the kicker – lack of market competition means card companies can keep rates sky-high. The real story goes deeper than just numbers.
While credit card companies rake in record profits, Americans are grappling with staggeringly high interest rates that show little sign of dropping. The nationwide median credit card rate sits at a jaw-dropping 24.20% as of May 2025, having stubbornly stayed put for three straight months. So much for market competition driving down costs.
Different reporting agencies paint slightly different pictures of just how bad it is. Expensify pegs the average at 22.8%, while the Federal Reserve reports 21.37% for early 2025. Bankrate’s showing 20.12%. Take your pick – they’re all painfully high. Banks face substantial operating expenses of 4-5% annually just to maintain their credit card programs.
The story behind these sky-high rates is a familiar one. Credit card rates have been on a wild ride, averaging 23% in 2023 after hitting rock bottom at 15% during the pandemic. They climbed to 22% by November 2024, took a breather, and then decided to really stick it to consumers. The Fed’s first rate cut came on September 18, 2024, dropping rates by half a percentage point.
Want to know why rates are so stubborn? It’s a perfect storm. Inflation‘s forcing lenders to jack up rates to maintain the value of repayments. The Fed’s policies are making it more expensive for banks to borrow money. And let’s not forget credit scores – they’re still king when it comes to determining individual rates.
Meanwhile, Americans are drowning in credit card debt. The national total has hit a mind-boggling $1.21 trillion. Sure, people managed to pay down some debt during those sweet, low-rate pandemic days when credit card balances dropped by $120 billion. But those days are long gone.
Looking ahead, some experts think rates might finally ease up in 2025. They’ve already dipped slightly from their peak in late 2024. Financial analysts are watching inflation like hawks, since rates typically follow inflation’s lead.
But for now, millions of cardholders are stuck paying through the nose, while credit card companies continue their profitable party.
