Will my credit card interest rate increase in 2023? – Forbes Advisor


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Inflation has made most things more expensive in 2022, including credit card debt. So what does 2023 look like? No one knows for sure, but we can make an educated guess. Here’s why your credit card interest rate, also known as APR, which stands for Annual Percentage Rate, may go up.

Will my credit card interest rate increase in 2023?

It is certainly possible that your credit card interest rate will increase in 2023. Most credit cards have variable interest rates, which means that the interest rate on your account is linked to an index reference such as the prime rate. When the prime rate increases, your credit card’s APR also increases.

The prime rate itself is influenced by what is called the federal funds rate, set by the Federal Reserve. In 2022, the Fed raised this rate six times, trying to fight inflation.

Every time the Fed raised interest rates in 2022, credit card accounts with varying APRs also raised rates. If this continues into 2023, you can expect to see your card’s APR increase.

It’s also important to note that credit card issuers can raise your interest rate even when the prime rate doesn’t change, as long as they notify you 45 days in advance.

How Much Does Credit Card Debt Cost?

It’s well known that credit card debt doesn’t come cheap. Consider this assumption: if you were to pay off a balance of $2,000 over 12 months on a credit card with an APR of 20%, you would need to make payments of approximately $185.27 per month and pay approximately $223.23 in interest charges.

One of the reasons credit card interest can be so expensive is that it compounds daily. In other words, the interest you owe is calculated daily and added to your balance. When tomorrow’s interest is calculated, it is based on this new balance, including the previous day’s interest.

Can I avoid paying interest on my credit card?

There are generally two ways to avoid paying credit card interest. The first is to pay off your card in full each month, allowing you to take advantage of your grace period. But be aware that if you carry over a balance from one month to the next, for example if you only make the minimum payment due, you will lose your grace period and you will be charged interest. Plus, you’ll be charged interest not only for the month you carried a balance forward, but also for the following month.

The other way to avoid credit card interest is to take advantage of a card with a 0% introductory APR. These cards offer 0% interest introductory periods for new cardholders, often ranging from 12 to 21 months. Some cards have introductory APR offers on new purchases, some on balance transfers, and some on both. But be aware that you must always make at least the minimum payment due each month, even if you are not charged interest during the promotional period.

Also be aware that 0% intro APR credit cards are generally reserved for applicants with good or better credit. A good credit score is generally considered a FICO score of 670 or higher.

Avoid deferred interest offers. These may seem like 0% APR introductory offers at first glance, but they’re risky: if you don’t pay your balance within the promotional period, you’ll be charged interest on the full purchase amount at from the date of purchase, not just what’s left.

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How can I get out of credit card debt?

When paying down debt, there are two main strategies: the debt snowball and the debt avalanche.

With the snowball method, you pay off your debts from the smallest to the largest. You should make at least the minimum payment due on each account, of course, but whatever extra you have in your budget each month should go to the account with the lowest balance.

What it does is provide motivation. You get the easy wins first and you see visible progress.

With the debt avalanche method, you pay off your debts from the highest interest rate to the lowest interest rate. This ends up saving money in the long run on interest charges.

In addition to the methods above, you may want to consider a balance transfer card or a debt consolidation loan. With a balance transfer card, you transfer debt from one or more cards to a new card (from a different issuer) with a 0% introductory APR. There is usually a 3% to 5% balance transfer fee. However, even after the fees, you will likely save over the interest charges. Just make sure you can pay off what you owe in full before the end of the introductory period.

A debt consolidation loan will not allow you to avoid interest charges. However, you can get a better rate than what you pay on high-interest credit card debt. And, with a loan, you have a fixed monthly payment and a predetermined repayment date, unlike a credit card, which allows you to continue with minimum monthly payments, potentially plunging you into a cycle of increasing debt.

If you’re so underwater that these strategies and tools won’t work for you, consider talking to a reputable credit counselor who may be able to help you with a debt management plan.


Without a crystal ball, you can’t be 100% sure that your interest rate will go up in 2023. However, if 2022 is any indication, the chances of you paying more to carry a balance are high.


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