While 2024 gave many credit cardholders the opportunity to earn incredible rewards or cash in for big travel plans, they also faced rising debt balances and an ever-changing interest rate environment.As we approach 2025, there’s still uncertainty about what the future holds — new policies could affect the current state of card fees and rewards programs, interest rates will continue to change, and the value of benefits is constantly evolving.Here are a few trends and predictions we’re looking for in the year ahead.Since the Federal Reserve began lowering its target federal funds rate range earlier this year, we’ve already seen some credit card interest rates go down. Of course, rates haven’t lowered enough to ease the burden for cardholders with high-interest credit card debt.In the new year, experts expect the Fed to cut rates further — but we’ll have to wait and see just how quickly they’ll do so and how low rates will go.Related: How does the Fed affect your credit card interest rate?At the 2024 Yahoo Finance Invest conference in November, Federal Reserve Bank of Minneapolis president Neel Kashkari said the Fed will “have to wait and see what the data says” to determine its interest rate decisions in 2025. Recently, some expert predictions say the frequency of rate cuts may slow in 2025.If the Fed does cut rates more, you will likely see interest rates on credit cards to continue falling too. But that doesn’t mean you’ll see a significant difference in your APR. Average credit card interest rates are still upwards of 21%. Even if the Fed’s target rate range falls by a full percentage point or more, you shouldn’t wait to get started on paying down your balances — that won’t make a significant difference in your APR, and waiting can leave you with even higher mounting debts.Read more about the best balance transfer credit cards to help you start paying down debt now.Even as interest rates fall, credit card debt balances and delinquencies are growing. The most recent report from the New York Federal Reserve on Household Debt and Credit shows that Americans have an outstanding $1.17 trillion in outstanding credit card balances, 8.1% higher than a year ago. While credit card delinquencies have improved slightly, 8.8% of American card balances still became delinquent (or were more than 30 days late) in the third quarter of 2024.“Looking ahead to 2025, this upward trend in credit card balances may continue,” Barry Coleman, vice president of program management and education for the National Foundation for Credit Counseling, said in an email to Yahoo Finance.The 2025 Consumer Credit Forecast from TransUnion also points to balances and delinquencies increasing but at a slower pace.The credit bureau projects credit card balances will increase by 4.4% year over year by the end of 2025 (down from 18.5% in 2022 and 12.6% in 2023). Delinquencies, too, are projected to increase much more slowly in 2024 and 2025 than they did
Dom. Dic 29th, 2024
