The Federal Reserve held interest rates steady for its third consecutive meeting on Wednesday, so don’t expect lower interest rates on your credit cards anytime soon. But amid the looming impact of tariffs and an uncertain economy, your card’s APR could go up. 

The Fed left interest rates at a target range of 4.25% to 4.5% in response to a growing uncertainty in its economic outlook. Both inflation and unemployment are at a higher risk of increasing, depending on how tariffs play out, Fed Chair Jerome Powell said at a postmeeting press conference.

“There’s so much uncertainty about the scale, scope, timing and persistence of the tariffs,” he said. “The current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments.”

Although the federal funds rate only directly dictates lending between banks, the central bank’s monetary adjustments are passed on to consumers, affecting financing rates on loans and credit cards.

Borrowing rates for consumers have been high in the past several years, despite three interest rate cuts last year. Some experts still expect cuts in 2025, but it’ll depend on how the economy continues to react to things like tariffs, inflation and unemployment. 

Interest rates affect how much it costs to borrow money, including how much you pay in interest for credit card debt. While the Fed’s decision may not change your credit card interest rate anytime soon, other factors could.

What is APR?

Your credit card’s annual percentage rate, or APR, is the rate at which your card balance accrues interest over the course of a year. Your balance actually accrues interest daily, but the APR is how much your balance will grow annually.

What else affects your credit card APR?

Raising or lowering the federal funds rate — the overnight interest rate between banks — creates a domino effect. Credit card issuers often follow the Fed’s lead, increasing or decreasing their APRs. That, in turn, affects how much it costs you to carry an outstanding balance.

What else affects your credit card APR?

Credit card companies may align with the Fed when it lowers or raises interest rates, but other factors can also affect how much you pay to borrow: 

• Banks tighten lending in fear of a recession. Despite the Fed holding rates steady, banks aren’t bound by this and could opt to raise borrowing rates to ensure they still get their money even in times of economic hardship.
• Your credit score. Your credit score indicates to lenders how likely you are to repay money you borrow. A lower score could lead to a higher interest rate if the borrower doesn’t think you’ll pay it back.
• Your payment history with the lender. If you have a history of late or missed payments, your lender may hit you with a higher penalty APR of 29.99% or more.
• Type of purchase. Different purchase types may charge different interest rates. For example, if you use a cash advance (don’t do this) on your credit card, the APR will be much higher than for a standard purchase.

Your card issuer is currently required by law to alert you 45 days ahead of any changes in your card’s interest rate for new purchases.

“Card issuers can raise rates with 45 days’ advance notice, but typically that applies to new purchases, not existing balances,” said Gerri Detweiler, a credit expert and CNET Money Expert Review Board member. “There are also limitations on raising rates on existing balances; usually you must be at least 60 days late.”

However, those rules could potentially change.

“In the 2008 downturn, it was still legal for issuers to raise rates on existing credit card balances, and many did,” Detweiler said. “Watch notices from your card issuers that could signal a rate increase. In addition, some card issuers cut credit limits.”

The Consumer Finance Protection Bureau implemented many of the credit card and banking regulations that were introduced following the 2008 financial crisis. However, President Donald Trump gutted the CFPB, essentially dismantling the government agency created to protect borrowers. Many rules and regulations have already been unwound, so stay alert to any changes to your credit card terms.

What’s a good credit card APR?

The average credit card APR is over 20%, according to the Federal Reserve. So anything below the average might technically be considered a “good” APR by comparison, but any APR means you’re paying interest on an outstanding balance.

Therefore, the ideal APR is 0%, where you don’t pay any interest on your balance. There are credit cards that offer that perfect rate, albeit only temporarily, but we’ll get to that in a bit.

And while your APR won’t be going down due to the Fed’s decision this week, that doesn’t mean you can’t contact your issuer to ask for a lower interest rate. Depending on your relationship with them, they may grant your request. Even if they deny it, there wouldn’t be any repercussions for asking.

What can you do to pay down your debt without a lower APR?

You don’t need to wait for a lower interest rate to start to pay down any existing credit card debt. In fact, to avoid interest charges entirely, focus on paying off your statement balance in full each month.

Take it card by card

“It’s often helpful to tackle one card at a time, while continuing to pay at least the minimum amount on the others,” Detweiler said.

There are generally two prominent pay-off strategies, the debt snowball method and the debt avalanche. The former has you pay off the smallest balances first, while the latter prioritizes the balances with the higher interest rates.

“For some people, they get motivated by erasing a balance so paying off the card with the lowest balance is the best approach. Typically, though, you’ll save the most money in the long run by paying off the card with the highest interest rate,” she said.

Make bigger payments

You might not have enough to pay off your credit card this month (or next), but making more than the minimum payment each month can help reduce your balance quicker. A smaller balance means less interest accruing each month. Even if you’re just paying the minimum on one card so you can allocate a higher monthly payment to another, the more you can put toward the balance, the better off you’ll be.

Use a balance transfer credit card

Depending on your credit, you could also try to apply for a balance transfer credit card. These cards have an introductory APR of 0%. You can transfer the balance from your card that’s accruing interest to the balance transfer card and work on paying the balance down without it growing.

These cards offer 18 to 21 months of no interest, but they often require a balance transfer fee. This fee generally costs 3% to 5% of the transferred balance. While no one likes paying a fee, it’s typically much better to pay this one-time fee than continue paying interest on your other card. However, these cards typically require good to excellent credit to qualify.

Consider a personal loan

You could also try for a personal loan. Personal loans typically have much lower interest rates than credit cards — 7% compared to 20%, although terms often depend on the length of the loan and, again, your credit history.

If you can get a lower interest rate than your credit card APR, use the loan to pay off your card, and then work to pay down the personal loan quickly.

However, if you take this route, you may want to apply sooner rather than later. Given the current economic outlook, lenders could begin imposing stronger restrictions on loans.