What's Happening
14 minutes ago

What 16 Analyst Ratings Have To Say About Coinbase Glb

benzingabenzinga.com
14 minutes ago

Demystifying Global Payments: Insights From 7 Analyst Reviews

benzingabenzinga.com
14 minutes ago

DaVita Plunges Over 10% In Friday Pre-Market After Warren Buffett Cuts Stake In One Of Berkshire Hathaway's Longest-Held Investments

benzingabenzinga.com
14 minutes ago

Breaking Down Evolus: 4 Analysts Share Their Views

benzingabenzinga.com
14 minutes ago

Twilio Stock: A Deep Dive Into Analyst Perspectives (21 Ratings)

benzingabenzinga.com
15 minutes ago

2 Nasdaq Stocks That Are No-Brainer Buys Now

foolfool.com
15 minutes ago

Could IonQ Stock Help You Retire a Millionaire?

foolfool.com
20 minutes ago

Where Will Palantir Stock Be in 3 Years?

foolfool.com
30 minutes ago

Prediction: Buying Enbridge Today Will Set You Up for Life

foolfool.com
40 minutes ago

Uber CEO Hints At Potential Tesla Partnership For Robotaxis: 'No One Wants To Compete Against Tesla Or Elon'

benzingabenzinga.com
44 minutes ago

If You Invested $100 In Bitcoin Last Valentine's Day, Today It'd Be Worth More Than What An Average American Spends On Their Significant Other On The ...

benzingabenzinga.com
46 minutes ago

Want $1 Million in Retirement? 9 Simple Index Funds to Buy and Hold for Decades.

foolfool.com
50 minutes ago

Retirees in These 9 States Could See Their Social Security Checks Taxed

foolfool.com
55 minutes ago

At Home Restructured Bonds Offer Asymmetric Opportunity Via High Yields, Potential Capital Appreciation

benzingabenzinga.com
57 minutes ago

3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family

foolfool.com
60 minutes ago

These 2 AI Stocks Are Vying to Be the Next Palantir. Are Either of Them Buys?

foolfool.com
1 hour ago

Dow Jumps Over 300 Points Following Recent Inflation Data; Investor Sentiment Improves, Fear & Greed Index Moves To 'Neutral' Zone

benzingabenzinga.com
1 hour ago

Palo Alto Networks, Moderna And 3 Stocks To Watch Heading Into Friday

benzingabenzinga.com
1 hour ago

TikTok Returns To Apple And Google App Stores After A Month-Long Hiatus

benzingabenzinga.com
1 hour ago

Prediction: 2 Stocks That'll Be Worth More Than Bank of America 10-15 Years From Now

foolfool.com

Prediction: Credit Card Interest Rates Will Fall in 2025

An older person pays bills using their laptop at home.

Image source: Getty Images

If you owe money on your credit cards, you’re not alone. Experian reports that credit card debt is the most common type of debt in the U.S., with 45% of households carrying a balance.

Meanwhile, the Federal Reserve reports that as of August 2024, the average interest rate across all credit card accounts was 21.76%. If you owe $5,000 on your credit cards, at that rate, you’re looking at spending $1,211 on interest if it takes you two years to pay your balance off.

The good news, though, is that relief may soon be in sight. The Federal Reserve lowered its benchmark interest rate by half a percentage point in September. And that rate cut is likely to be the first of many. This means that come 2025, credit card interest rates could be a lot lower.

Lower rates could soon be upon us

The Federal Reserve doesn’t set consumer borrowing rates directly. When you sign a mortgage, for example, your lender determines what rate you can borrow at based on factors that include your credit score and existing level of debt. Similarly, when you sign an auto loan, your lender is the one to determine what rate you qualify for.

But when the Fed lowers its benchmark interest rate, known as the federal funds rate, it commonly leads to lower borrowing rates. The federal funds rate is what banks and financial institutions pay for overnight borrowing. When it’s less expensive for them to borrow, that savings tends to be passed along to consumers.

Meanwhile, the Fed is expected to keep cutting its benchmark interest rate in response to cooling inflation. That, in turn, is likely to lead to lower borrowing rates on a whole in 2025 — credit cards included.

How low will credit card interest rates go in 2025?

Without a crystal ball, it’s hard to say. We don’t know how aggressively the Fed will lower its benchmark interest rate.

But let’s be optimistic and say credit card rates will fall 2 percentage points on average from where they are today. That would still leave you paying close to 20% interest on your balances. So rather than sit back and hope for a lower interest rate on your debt, a better bet is to try to pay off your credit cards as quickly as you can.

You have a few options to pay down your credit cards. One is to do a balance transfer, which could give you a 0% introductory interest rate on your debt for a period. If you’re able to boost your income with a side hustle and pay off your balance before that introductory period ends, you might save a lot of money on interest and get your balance wiped out. Click here for a list of the best balance transfer offers.

Another option is to consolidate your credit card debt into a personal loan. A personal loan won’t give you a 0% introductory period, but you might lock in a much lower interest rate on one than what your credit cards are charging you, and you’ll have a set payoff date, too. Click here for a list of the best personal loans available today.

While there’s a strong chance credit card interest rates will fall in 2025 — and to a notable degree — your best bet is to try to shed that debt as soon as you reasonably can. Once you do pay off your balances, try to avoid racking up new ones.

Even if rates dip quite a bit in the new year, credit cards will remain an expensive borrowing option. It’s best to explore other ways to borrow when you need to, or to budget carefully to avoid debt altogether.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

Related Posts

Social Security is an essential piece to most American’s retirement plans. Without their monthly benefits, some 16.3 million seniors U.S, would be living below the

The average retirement age in the U.S. was 62 in 2023, but that number’s been slowly ticking up over time. Rising life expectancies and rising

While the stock market is still thriving, some investors may be feeling wary about the future. Spiking inflation could cause the Federal Reserve to shift

There are plenty of ways to become a millionaire, like starting a successful business, being a professional athlete, or becoming a movie star. For most