Definition
The interest charged on credit card balances that aren't paid off in full each month, usually shown as an APR (annual percentage rate).
The story
Pay the full statement balance by the due date and most cards charge no interest on purchases. Carry a balance and interest is added, and then interest is charged on that interest too. Federal Reserve data show the average rate on card accounts that were charged interest has been above 20% in recent years.
Why markets watch it
Many card rates are variable and tied to the prime rate, which moves with the Fed's rate, so a Fed change can show up on card bills soon after.
See it in the story
Connects to
APR and APYCompound interestFederal funds rateCredit scorePrime rate
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms