Credit card interest rates aren't the highest they've ever been — but it's close. According to USA Today, the average credit card rate is 20.51 percent, down slightly from the all-time high of 20.79 percent in August of this year. But credit card interest generally remains the highest it has ever been, even when compared to periods when other interest rates were higher than current levels.
The reason is pretty simple: Card companies are charging more to use their cards. In addition to prime lending rates, card issuers tack on "margins," or additional interest above the prime lending rate. And at around 15 percent for most cardholders, card margins are the highest they've ever been, according to WalletHub.
The American Financial Services Association cites increased overhead as the reason for the higher card margins. In addition to higher labor costs, the AFSA claims that compliance costs have increased with evolving government regulations. Card companies must also divert more resources toward fraud prevention as cybercriminals devise increasingly sophisticated methods to rip off consumers.
But card companies have a profit motive as well, and some lenders even increased margins on new cards in response to recent Federal Reserve rate cuts. Meanwhile, consumer satisfaction among cardholders, many of whom struggle with high credit card debt, is abysmal — regardless of the frequent flyer miles earned.