From CNBC:

Credit card issuers have raised “APR margins” as rates have surged in 2022. The average APR margin was 14.3% in 2023, up from 9.6% in 2013. These hikes have led to higher profits for card companies, with an estimated extra $25 billion earned in the last decade.

Some experts suggest rising credit card interest rates are a response to increased risk, including growing delinquencies. Serious delinquencies on credit card payments have risen across all age groups. Lenders typically raise rates to account for the risk they are taking on in extending credit.

Industry concentration might also be a factor in the decision to raise APR margins. Large lenders control a significant portion of the credit card market, with the top 10 companies holding 83% of it. The recent announcement of Capital One’s acquisition of Discover Financial further consolidates the industry.

Consumers can avoid high interest rates by paying credit card bills on time and in full each month. Not carrying a balance means avoiding interest charges. Responsible payment behavior can also lead to better credit scores and access to lower-interest-rate cards or 0% APR introductory offers for balance transfers.



Read more: Credit card interest rates are at record highs