Jan 11, 2023 - Economy

Credit card interest rates hit record high

Data: FactSet, Federal Reserve; Chart: Axios Visuals
Data: FactSet, Federal Reserve; Chart: Axios Visuals

Costs for Americans to finance their purchases on credit cards just touched the highest level on record, according to government data stretching back to the early 1970s.

Why it matters: With prices rising, Americans have been putting more on credit cards, and they're paying out the nose for the privilege.

Driving the news: The Federal Reserve's most recent report on costs of consumer credit showed average interest rates on bank-issued credit cards touching 19.1% in the fourth quarter.

  • That beats the previous record high — 18.9% — set in the first quarter of 1985.

The intrigue: While it might seem like an indicator that households are under serious financial stress, most other readings on the health of American households seem more or less fine.

  • Delinquencies on credit cards, while rising, are quite low.
  • Household debt as a share of gross domestic product is also pretty low.
  • Most importantly, unemployment is low, at 3.5% in December.

What we're watching: What banks have to say about the outlook for rising delinquencies and defaults among consumers this year when they start reporting quarterly earnings later this week.

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