Why Are Credit Card Interest Rates Still So High in 2025? What You Need to Know

The average APR is 23.99%—but for many Americans, it’s even higher. Here's why it matters and how to protect your finances

Credit Card APRs Are Still High in 2025—Here’s Why

If you're carrying a credit card balance in 2025, you're not imagining things—your debt is getting more expensive. According to Investopedia, the average credit card interest rate in June 2025 is 23.99% APR. That's slightly down from previous months, but it’s still one of the highest levels recorded in recent years.

Despite interest rate cuts from the Federal Reserve, most cardholders haven’t seen meaningful relief. In this blog, we’ll explore:

• Why credit card APRs remain elevated
• How your credit score affects your rate
• Smart strategies to lower your interest costs
• When it’s time to consider debt relief

Let’s break it down.

The Fed Is Cutting Rates, So Why Aren’t APRs Falling?

The Federal Reserve began lowering the federal funds rate in late 2024, following a 14-month period of peak rates. By December 2024, three separate cuts brought the fed funds rate to 4.25%–4.50%, the lowest level since March 2023.

But if the Fed is cutting rates, why are credit card APRs still around 24%?

The reason is that most credit card rates are variable and indexed to the prime rate—but that’s only part of the story. Issuers also factor in:

• Your credit risk (based on credit score)
• Market competition
• Internal risk models
• Delinquency trends

So while Fed policy influences APRs, it’s not the only driver. And right now, credit card issuers are playing it safe, keeping rates high to offset consumer risk.

Your Credit Score = Your APR

Most credit card companies base interest rates on your FICO score, and the differences between tiers are dramatic. Here’s a general breakdown:

FICO Score Range        Credit Quality                Estimated APR Range

740–850              Very Good to Excellent                 17%–20%                          

670–739                          Good                                  21%–25%

580–669                           Fair                                    25%–28%

350–579                   Poor or No Credit                     28%–30%+

Even with a "good" score, you might still be paying above 23% APR.

That’s why understanding your credit score—and improving it—can make a meaningful difference in how much you pay in interest.

Why High APRs Are Dangerous for Everyday Americans

Let’s put this in real numbers:

If you have a $4,000 balance at 23.99% APR, and only make the minimum payments:

• You could pay over $3,000 in interest
• It may take you 10–15 years to pay it off
• A large portion of each payment will go to interest, not principal

When rates are this high, it becomes nearly impossible to make progress on your debt—especially if you rely on credit for essentials like groceries, gas, or medical expenses.

Can You Lower Your Interest Rate?

Yes, but it usually takes action. Here are a few ways to reduce your APR and overall debt cost:

1. Negotiate with Your Credit Card Company

Many issuers may agree to a lower rate—especially if you’ve been a loyal customer or your credit has improved.

2. Use a Balance Transfer Card

Some credit cards offer 0% introductory APR for 12–21 months. Be sure to check for transfer fees and complete payoff plans.

3. Take Out a Personal Loan

Personal loans offer fixed interest rates—often lower than credit card APRs—for those with decent credit. Use it to pay off multiple cards and simplify your payments.

4. Enroll in a Debt Relief Program

If your balances feel out of control or interest charges are keeping you stuck, it may be time to explore structured debt relief or consolidation plans. These can reduce interest, stop fees, and create a faster path to becoming debt-free.

Debt Consolidation vs. High APRs: What Makes Sense?

In a survey by Investopedia, debt consolidation was the top reason people took out personal loans in 2023—and that trend continues in 2025.

Why? Because at nearly 24% APR, keeping balances on your credit card is simply too expensive. Consolidation allows you to:

• Lock in a lower, fixed rate
• Make one monthly payment
• Set a clear timeline for payoff
• Avoid late fees and penalty APRs

If you’re juggling multiple cards with high interest, this may be your best option.

Don’t Just Survive—Take Control

Rising APRs aren’t just a finance headline—they’re a daily reality for millions of Americans. The good news is, you don’t have to keep paying 24% or more in interest.

At Mitigately, we help people:

• Understand their credit situation
• Explore lower-interest options
• Consolidate or negotiate their debt
• Break free from the minimum payment trap

It starts with a simple conversation. If you’re ready to reduce your interest and regain control of your credit card debt, we’re here to guide you.

Final Thoughts

Credit card interest rates in 2025 are still sky-high, even with federal rate cuts. For many Americans, this means spiraling balances, financial stress, and limited options.

But you do have options. Whether it’s negotiating a lower rate, consolidating your debt, or exploring relief programs, the key is to act before the interest piles higher.