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Credit card interest rates are much higher than those on personal loans, according to the St. Louis Federal Reserve Bank. (iStock)
as the Federal Reserve raise interest rates To keep inflation in check, the impact of rate hikes may vary depending on the type of debt. This disparity has resulted in a record gap between personal loan and credit card interest rates. St. Louis Federal Reserve Bank.
According to the latest data, the average credit card interest rate was 16.27% in August, while the average personal loan interest rate was 10.16%.
This is one of the largest gaps between commercial bank credit card plan interest rates and 24-month personal loans in the St. Louis Fed’s recorded history.
The news comes at a time when Americans have a sizeable amount of credit card debt. Credit card balances increased by $46 billion in the second quarter of 2022, the biggest quarterly surge in more than 20 years. Federal Reserve Bank of New York.
Plus, half of Americans are behind on credit card debt amid high inflation. According to research.
If you have high-interest credit card debt, consider paying it off with a low-interest personal loan to save money each month. You can visit Credible to compare various personal loan lenders and interest rates without affecting your credit score.
Personal Loan Interest Rates Continue to Decline for 5-Year Fixed-Rate Loans
Credit card interest rates hit all-time high
The average credit card interest rate as of August was 16.27%, the highest in the history of St. Louis Fed reports dating back to November 1994.
This is worth noting because high interest rates on outstanding credit card balances can significantly inflate your overall total debt.
Total American household debt has also increased recently, rising by $312 billion to reach $16.15 trillion in the second quarter of 2022, according to a New York Fed report. Total household debt includes factors such as credit cards, mortgages, and student loans.
“Mortgage, auto, and credit card balances increased significantly in the second quarter of 2022, partly because of higher prices,” said an administrator at the New York Fed’s microeconomic data center. says Joel Scully.
If you’re struggling with outstanding debt, you can consolidate with a low-interest personal loan. Talk to a Credible personal loan expert to see if a debt consolidation loan is right for you. Have all the questions answered.
Survey results that many college students who have credit cards have debt
Fed may continue to hike rates in 2023 to keep inflation in check
rising inflation 8.2% YoY The Bureau of Labor Statistics (BLS) said September was a far cry from the Fed’s 2% inflation target.
To curb inflation, Fed may continue to raise rates This move could affect interest rates on some financial instruments. For example, the average 24-month personal loan interest rate rose slightly from 8.73% for him in May, to 10.16% for him in August.
If you want to take advantage before current interest rates rise, you can consider using a personal loan to consolidate your debt at a lower interest rate. Visit Credible Marketplace to Compare Personal Loan Lenders without affecting your credit score.
The average millennial owes more than $100,000 in non-mortgage debt: survey
Have a financial question and don’t know who to ask? Email a Credible Money Expert moneyexpert@credible.com Your question may be answered by Credible in the Money Experts column.
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