2025 Credit Card Trends: Interest Rates, Rewards, and Fees

The year 2024 presented credit card users with both opportunities and challenges. While lucrative rewards and travel perks were abundant, rising debt and fluctuating interest rates created a complex landscape. As we move into 2025, uncertainty persists. Potential policy changes, interest rate fluctuations, and evolving benefit values will continue to shape the credit card landscape. This article explores key trends and predictions for the coming year.

Interest Rate Outlook: Anticipating a Decline

Following the Federal Reserve’s decision to lower its target federal funds rate earlier this year, some credit card interest rates have already decreased. However, the reduction hasn’t been substantial enough to alleviate the burden on cardholders grappling with high-interest debt. Experts anticipate further rate cuts by the Fed in 2025, but the pace and extent of these reductions remain uncertain.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, emphasized a data-driven approach to future interest rate decisions at the 2024 Yahoo Finance Invest conference. Recent expert projections suggest a potential slowdown in the frequency of rate cuts in 2025. While further Fed rate cuts could lead to lower credit card interest rates, a significant impact on APRs is unlikely. With average credit card interest rates still exceeding 21%, actively paying down balances remains crucial, regardless of potential rate fluctuations.

Related: How does the Fed affect your credit card interest rate?

Read more about the best balance transfer credit cards to help you start paying down debt now.

Debt and Delinquency Trends: Slower Growth Projected

Despite potential interest rate declines, credit card debt and delinquencies are on the rise. The New York Federal Reserve’s recent report on Household Debt and Credit reveals outstanding credit card balances of $1.17 trillion, an 8.1% increase year over year. While delinquency rates have slightly improved, 8.8% of card balances were delinquent in the third quarter of 2024.

Experts, like Barry Coleman of the National Foundation for Credit Counseling, predict this upward trend to continue in 2025, albeit at a slower pace. TransUnion’s 2025 Consumer Credit Forecast supports this projection, anticipating a 4.4% year-over-year increase in credit card balances by the end of 2025, significantly lower than previous years’ growth. Delinquency rates are also expected to rise at a slower rate.

Economic factors, such as interest rate changes and consumer spending habits, will ultimately determine the trajectory of credit card debt levels. Moderating inflation could potentially decrease reliance on credit cards for daily expenses. However, with lending standards remaining relatively stable, credit usage may remain elevated.

Travel Rewards Program Updates: Changes on the Horizon

Several travel rewards programs have announced changes impacting cardholders in 2025. Delta SkyClubs will implement new access limits for American Express cardholders, while Alaska Airlines is revamping its loyalty program with updated milestone rewards and elite-qualifying mile accrual opportunities. Capital One cardholders will face restricted access to Capital One Lounges. These adjustments highlight the dynamic nature of travel rewards programs.

Find the right card for your 2025 travels: The best travel credit cards

Persistent Fraud Risks: Staying Vigilant in 2025

The risk of identity theft and account fraud remains a significant concern for cardholders in 2025. Data breaches and traditional theft methods continue to pose threats. Eva Velasquez, CEO of the Identity Theft Resource Center, emphasizes the ongoing nature of these risks, both online and offline. Protecting personal information and remaining aware of surroundings are crucial for mitigating fraud risks.

Read more: 6 tips to avoid credit card fraud and scams

Fee Increases: Interchange and Annual Fees

While interest rates may offer some relief, cardholders can expect to contend with increasing fees in the coming year. Interchange fees, also known as swipe fees, are a subject of ongoing debate between banks and merchants. These fees, charged by card networks to process transactions, can indirectly impact consumers through higher purchase prices. The Credit Card Competition Act, though yet to be voted on, could potentially influence swipe fees in the future.

Related: Credit card fees explained — 8 types you should know

Annual fees are also anticipated to rise as issuers face increasing costs for providing rewards and benefits. The American Express® Gold Card’s recent fee increase exemplifies this trend. The emergence of more premium credit cards, particularly co-branded travel cards, could further contribute to rising annual fees.

Related: Is the Amex Gold Card still worth it? See what’s changed.

Read more: Best airline credit cards

Impact of Acquisitions: Potential Changes for Cardholders

The 2024 acquisitions and mergers within the financial and travel industries could significantly impact cardholders in 2025. Capital One’s proposed acquisition of Discover, still under regulatory review, could reshape the payment network landscape. The merger between Alaska Airlines and Hawaiian Airlines, while not directly involving credit card companies, will eventually lead to merged loyalty programs, potentially affecting cardholder benefits. These developments underscore the evolving nature of the credit card industry.

Read more: How Capital One’s acquisition of Discover could affect you

Conclusion: Navigating the Evolving Credit Card Landscape

The credit card landscape in 2025 promises both opportunities and challenges. Potential interest rate declines may offer some relief, but rising debt, evolving rewards programs, persistent fraud risks, and increasing fees require careful navigation. Staying informed about these trends and actively managing credit card usage will be crucial for maximizing benefits and minimizing financial risks in the coming year.