Inflation doesn’t only impact the prices you pay for goods. It also leads to higher credit card interest rates. This has become a bigger fear lately amid worries that President Donald Trump’s tariff plans could push consumer prices higher and cause credit rates to soar as well.
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In the event that happens, you should take steps to prepare. A good place to start is by understanding the relationship between inflation and credit card rates.
Also see six reasons credit card debt is spiking and what to do about it.
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Inflation and Credit Card Rates
As with most interest rates, credit card rates are “very sensitive” to inflation, according to a recent blog from CardRatings. It explained that rising inflation diminishes the purchasing power of the money credit card companies receive, and to compensate, companies raise their own rates.
That’s a frightening prospect, considering that credit card rates are already historically high. The average commercial bank interest rate on credit card plans across all accounts was a very steep 21.37% as of February 2025, according to the latest data from the Federal Reserve Bank of St. Louis.
Here’s how rates have trended over the past 15 years:
February 2010: 14.26%
February 2015: 11.98%
February 2020: 15.09%
February 2025: 21.37%.
As those numbers show, credit card rates have skyrocketed this decade — along with inflation. Rates could push even higher if a tariff-induced trade war leads to higher consumer prices.
To avoid getting caught off-guard, here are four hacks to help you prepare, according to CardRatings.
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Tweak Your Budget
If your current budget includes items that require credit card payments, take those items off the list. If they’re necessary expenses, try cutting out nonessentials to avoid using credit, or try paying for them with cash.
Pay Down Current Balances
It’s always a good idea to pay your credit card balances in full each month to avoid interest charges. At the very least, you should pay more than the minimum. If you have multiple cards, consider paying the highest-interest card off first.
Refinance Your Debt
One option is to move your high-interest credit card debt to a 0% balance transfer card. Once your balance has been transferred, you’re typically given a year or so to pay the balance down interest-free before the new card’s interest kicks in.
Just make sure you focus on paying the balance down rather than making purchases that will push it back up again. Additionally, as U.S. News & World Report noted, be sure to make note of any fees, as that could counteract the 0% interest rate.
Improve Your Credit Score
It’s no secret that the higher your credit score, the more likely you are to get better credit card interest rates. Consumers can improve their credit score by paying bills on time and reducing their debt load. Doing so can provide borrowers more leverage when it comes time to negotiate credit terms.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Don’t Be Caught Off-Guard If Credit Rates Skyrocket — 4 Hacks To Prepare Now
