In a recent CBS News article, When could credit card interest rates become affordable again?, financial experts, including Craig Toberman, weigh in on the forces driving persistently high credit card rates.
The article discusses how credit card interest rates in the United States have surged, with the average APR at 21.37%, nearing the 2023 record of 22.8%. This spike has led to higher household debt burdens and increasing delinquencies, with over 90-day payment lapses rising 8.5% in Q1 2025. This data highlights a growing challenge for many American households.
Craig Toberman, partner at Toberman Becker Wealth, emphasizes that credit card rates often lag behind changes in the Fed’s benchmark rate and are shaped by broader lender risk assessments. He explains that:
“Credit card interest rates move at a slower pace than the Fed's benchmark rate. Even if the Fed begins cutting rates, lenders weigh other factors heavily, like the risk of default and their operating margins.”
Toberman points out that structural factors, such as rising delinquencies and cautious lender risk assessments, are likely to delay meaningful rate relief for consumers, even if the Fed begins rate cuts later in 2025 or 2026.
Toberman’s analysis suggests that consumers shouldn’t expect immediate or significant relief from high APRs, even in a more accommodative monetary environment. His caution underscores the complexity of rate-setting by credit card issuers, who prioritize risk management and profitability over quickly passing along the benefits of falling federal rates.
He offers a pragmatic voice amidst growing concerns about debt affordability, pointing to a longer-term path toward lower rates, contingent upon Fed action and improved credit metrics across the board.
With credit card rates at near record highs, even small balances can quickly become overwhelming.
At Toberman Becker Wealth, we help clients create strategic plans to manage credit and strengthen their financial foundation as they prepare for retirement. Whether it’s reducing high-interest liabilities or improving cash flow, a personalized approach can ease the impact of rising interest rates and put you back in control.
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Craig Toberman is a Partner at Toberman Becker Wealth – a fee-only, fiduciary financial advisor based in St. Louis. He assists families and businesses with strategic financial planning and long-term wealth management. He has over a decade of experience in financial services and has crafted custom financial plans for hundreds of families and businesses.