Credit card APRs have never been this high

The average interest rate for a credit card in the U.S. has climbed to a record high of 19.04%, driven up by the Federal Reserve's ongoing push to cool inflation by ratcheting up borrowing costs.

A credit card interest rate, known as the annual percentage rate (APR), goes into effect when cardholders are unable to pay their bills in full each month. If you carry a balance, you're charged interest on whatever you owe the following month, and that balance grows over time. 

Today, the average credit card APR surpassed its previous record of 19% in July 1991, according to Bankrate.com. In early 2022, the typical card had an APR of 16.3%. 

"This time it's all about the Federal Reserve, which has raised the federal funds rate 375 basis points since March in an effort to combat the highest inflation readings in four decades," Bankrate.com analyst Ted Rossman said in a statement to CBS MoneyWatch. 

APR increases typically show up on cardholders' statements within a couple billing cycles and apply to new and existing balances. At the beginning of the year, a cardholder with a balance of $5,000 making the minimum payment would have remained in debt for 185 months and accrued $5,517 worth of interest, according to Rossman's analysis. At the new record-high rate, that same cardholder would be in debt for 191 months and accrue an additional $6,546 in interest. 

The average APR on retail store cards has also reached a new high at 26.72%, up from 24.35% last year, according to an analysis from CreditCards.com.