Although the Fed reduced interest rates by half a point, the average credit card interest rate only decreased by 0.13%, according to a report.

• The Federal Reserve's half-point reduction in interest rates caused credit card APRs to decrease slightly, but not significantly.
• Despite the possibility of further rate cuts, individuals with credit card balances are unlikely to experience relief.

Americans are increasingly struggling to pay off their credit card balances. One reason for this is that carrying a balance incurs a high cost.

The Federal Reserve's 11 rate hikes starting in March 2022 led to a spike in credit card rates, with the average annual percentage rate rising from 16.34% to more than 20% today, which is near an all-time high.

The Fed has reduced interest rates by half a point on Sept. 18, and is predicted to lower its benchmark rate even further during its next meeting.

Credit card users are paying off last year's holiday debt, while holiday shoppers plan to spend more and take on debt. In 5 cardholders, a credit card has been maxed out or nearly reached its limit.

The Fed's benchmark has a direct connection to the variable rate of most credit cards.

A recent survey by CardRatings.com revealed that only 37% of credit cards adjusted their rates in response to the Fed's September rate cut as of the fourth quarter's start.

The report found that the average credit card interest rate decreased by only 0.13% compared to the previous quarter.

According to Jennifer Doss, executive editor and credit card analyst at CardRatings, when the Fed reduces interest rates, credit card rates do not decrease as significantly.

"Lending to consumers becomes riskier when the Fed cuts rates, which is one reason credit card companies are being cautious."

Despite the possibility of further rate cuts, individuals with credit card balances are unlikely to experience significant relief, according to experts.

"Greg McBride, chief financial analyst at Bankrate.com, stated that interest rates will go up in the elevator and then go down the stairs," said Greg McBride.

Instead of waiting for minor APR adjustments in the future, there are alternative strategies to manage high-cost variable rate debt.

Make paying down credit card debt a priority

"No matter what the Fed decides, it's always a good idea to prioritize paying down credit card debt," advised Sara Rathner, a credit cards expert at NerdWallet. "Even if you can't pay off a large balance quickly, any extra money you can put toward your debt each month can make a difference over time."

Regardless of the Fed's next moves, "examine your current position," advised Rod Griffin, senior director of consumer education and advocacy for Experian.

Paying your credit card balances in full and on time every month and keeping your utilization rate below 30% of your available credit can lead to credit card rewards and a higher credit score, which can result in lower-cost loans and better terms.

Individuals who continue to carry debt from month to month are at risk of becoming trapped in an expensive debt cycle.

Better rates are available for renegotiating high-interest credit card debt, Griffin said.

""As a consumer, you have the power to switch to a different provider if you're not satisfied with the rates," he advised."

Cardholders can request a lower interest rate on their current card by contacting their issuer. A 2023 LendingTree survey found that the average reduction in APR is about 6 percentage points, and 76% of those who asked for a lower APR received one.

Griffin advises consumers to speak up and tell their lenders, "I can perform better elsewhere, or you can offer me better terms."

The interest rate you pay on your credit card is largely determined by your credit score, according to CardRatings' Doss.