The average credit card rate is 20.21 percent, the highest since we started tracking credit card rates way back in 1985. A year ago, it was “just” 16.43 percent. Of course, that was still a hefty rate — we always suggest paying your credit cards in full to avoid interest, if possible. In large part because they represent unsecured debt, credit cards charge much higher interest rates than most other financial products, including mortgages and car loans.

Credit card rates rose more in 2022 than any other year on record. The catalyst was the aggressive series of interest rate hikes implemented by the Federal Reserve. These were well-intentioned, since they were meant to combat the hottest inflation readings in decades, but there are real consequences for certain individuals — including people with credit card debt.p

In fact, almost half of credit cardholders (46 percent) carry debt from month to month, according to a December 2022 Bankrate survey. That’s up from 39 percent a year prior. And those debt loads are higher, too. The New York Fed reports that Americans’ total credit card balances surged 28 percent from the first quarter of 2021 to the fourth quarter of 2022. The grand total is an all-time high, and the rate of change over the past quarter and the past year were both records as well.

It’s triple trouble, really: More people are carrying credit card debt, there’s more of that debt and it costs more than ever to service that debt. And while the average credit card rate has risen 3.87 percentage points since the Fed’s first rate hike of this cycle (on March 16, 2022), chances are that your personal credit card rate is 4.75 percentage points higher.

That’s because changes to the prime rate (which is three percentage points above the federal funds rate set by the Federal Reserve) are directly passed through to the vast majority of credit cardholders (whereas our national average reflects new card offers on more than 100 popular cards from the 50 largest issuers).

For most existing cardholders, the typical rate structure is the prime rate plus the issuer’s profit margin. As long as rate adjustments are tied to a change in this underlying index, card issuers don’t need to give you any special notice, and the changes pertain to both new and existing balances.

How to get out of credit card debt

If you’re wrestling with credit card debt, my top tip is to sign up for a balance transfer credit card with a 0 percent intro APR offer. These offers last as long as 21 months, and using them is a form of debt consolidation. You move your existing, high-cost credit card debt over to a new card with a 0 percent promotional rate. If you’re able to pay the full amount by the time the clock runs out, you can save a ton of money on interest charges. There’s typically a 3 to 5 percent balance transfer fee, but that’s well worth it, provided you can make substantial progress paying down your debt.

I think the best way to use a balance transfer card is to refrain from making any new purchases. Even if they’re not charged interest for a while, it’s hard to hit a moving target. I suggest dividing what you owe by the number of months in your interest-free term and trying to stick with that level of payment plan. That should give you the greatest odds of success. It’s worth noting that you need a good to excellent credit score to qualify for the best balance transfer cards.

If you have a lower credit score, a debt management plan offered by a reputable nonprofit credit counseling agency such as Money Management International might be your best choice. The agency will negotiate with your creditors and can often come up with a plan along the lines of a 7 or 8 percent interest rate over four or five years. A nominal set-up fee and low monthly fees also apply. Best of all, this assistance is widely available, so you don’t need great credit. And you’ll have a helpful guide along your debt payoff journey.

If you have a strong credit score, you can accomplish a similar objective via a personal loan. The most creditworthy applicants can get rates as low as about 7 percent over five, six or maybe even seven years. Assuming you can qualify for a desirable 0 percent intro APR balance transfer offer, I still like that option better because it’s interest-free. But a personal loan term can be longer, so it’s worth considering in certain situations.

Consider turbocharging your debt payoff strategy by combining one of the aforementioned strategies with other efforts to up your income and/or cut your expenses. These could include taking on a side hustle, selling stuff you don’t need, dropping little-used subscriptions and more.

One thing is for sure — making only minimum payments on your credit cards isn’t nearly enough. If you have $5,805 in credit card debt (the national average, according to TransUnion) and you only make minimum payments at the average interest rate of 20.21 percent, you’ll be in debt for more than 17 years and will owe more than $8,300 in interest.

The bottom line

Credit card rates will probably edge a little bit higher from here, and then there’s a good chance they will level off for a while. Something in the neighborhood of 20 percent should be the new normal, at least for the foreseeable future. If you have credit card debt, chances are that it’s your priciest debt by a wide margin. That’s why it’s so important to pay way more than the minimum. Pay it all if you can. If you can’t, take advantage of a balance transfer promotion or one of these other money-saving debt payoff strategies.

Have a question about credit cards? E-mail me at and I’d be happy to help.