Drowning in High Credit Card Rates, Americans Turn to a Cheaper Lifeline

As credit card APRs sit near historical highs, consumers are shifting borrowing toward cheaper, fixed-rate personal loans — a move with broader market implications. Credit card balances reached $1.084 trillion and average APRs are about 21%, while average personal loan rates for a 700 FICO borrower are roughly 12.04%, creating a material cost gap that encouraged a 16% rise in personal loan applications in 2025. Rising personal-loan balances (to $207.1 billion, +7.4% year-over-year) and greater use of one-off tax refunds to pay down cards could reshape retail credit demand, reduce interest income on revolving credit for card issuers, and alter consumer spending patterns. Policymakers’ inaction on rate caps and fixed loan structures mean this substitution trend may persist.