Finance

Xiaomi is putting a premium price on its first electric car because it already has about 20 million users in that segment, Group President Weibing Lu told CNBC.
The company has generally been known for more affordably priced products. That’s raised doubts about whether it can sell an electric car – promoted as a rival to Porsche – in a market where even established giant BYD is slashing prices.
An important part of Xiaomi’s strategy is its operating system for connecting the car with the smartphones and home appliances the company already sells.

Chinese consumer electronics company Xiaomi revealed Thurs., Dec. 28, 2023, its long-awaited electric car, but declined to share its price or specific release date.
CNBC | Evelyn Cheng

BEIJING – Chinese smartphone company Xiaomi believes it’s identified a consumer niche that will pay up for its upcoming electric car in a fiercely competitive market.
“We think it’s a good starting point for us in the premium segment because we have already 20 million premium users in China based on the smartphone,” Xiaomi Group President Weibing Lu told CNBC ahead of the car’s international reveal at the Mobile World Congress in Barcelona, which kicks off Monday.

“I think the initial purchases will be very overlapped with the smartphone users.”
He said the company considered a range of price points, from entry level to luxury, for a car it’s spending $10 billion to develop.
Xiaomi revealed its SU7 electric car in China in late December but has yet to announce a specific price. Lu said a formal release would come “very soon” and indicated domestic deliveries would start as soon as the second quarter.

The Beijing-based company is a market leader in the smartphone industry, ranking third in global shipments behind Apple and Samsung, according to Canalys. Data from the tech market analysis firm showed that Xiaomi captured about 13% of the global market and shipped 146.4 million phones in 2023.
The company in recent years has also branched out into TVs and home appliances, which are smartphone-controllable and often sport a sleek, white design. Most of Xiaomi’s revenue is from phones, with just under 30% coming from appliances and other consumer products.

Xiaomi has generally been known for more affordably priced products. That’s raised doubts about whether it can sell an electric car – promoted as a rival to Porsche – in a market where even established EV giants like BYD are slashing prices.

In the future we think it’s not [that] we give the instruction to the device but actually [that] the device can understand your needs and meet your needs proactively

Weibing Lu
Xiaomi, president

Lu said Xiaomi’s approach is based on ecosystem development, as well as a smartphone “premiumization” strategy launched in 2020 that has since “achieved very good progress.”
In an earnings call in November, he noted the company benchmarked its latest Xiaomi 14 phone to the iPhone 15 Pro, and claimed the new device was “overtaking” Apple’s, according to a FactSet transcript.
However, also eating into Apple’s market share is Huawei, whose popular Mate60 Pro starts at 6,499 yuan ($900), between the price range of the Xiaomi 14 Pro and iPhone 15 Pro.
Huawei saw smartphone shipments in the mainland surge by 47% year-on-year in the fourth quarter, putting it ahead of Xiaomi, according to Canalys.
Building on its tech capabilities as a telecommunications and smartphone company, Huawei has swiftly become a player in China’s electric car market.
The company launched the Aito vehicle brand in late 2021 and sells its HarmonyOS operating system and other software to multiple auto manufacturers. Huawei also promotes some of those cars, including the premium-priced Aito M9 SUV, by showing them in its smartphone stores.
Apple has yet to formally enter the electric car market despite reports it has been working on one. In the fall, Chinese startup Nio released its own Android smartphone.

Ecosystem development

Xiaomi launched a new operating system in the fall called HyperOS.
It claims the system includes an artificial intelligence component that can learn from user behavior to automatically adjust connected devices, such as home lighting.
“In the future, we think it’s not [that] we give the instruction to the device but actually [that] the device can understand your needs and meet your needs proactively,” Lu said.
The company calls the strategy “human x car x home.”
HyperOS is only available on Xiaomi’s 14 phone right now. But the system is due for rollout in the coming months to appliances and the forthcoming car, Lu said.

Read more about electric vehicles, batteries and chips from CNBC Pro

Spending billions of dollars on the ecosystem and the car are all part of Xiaomi’s efforts to survive in an industry the company expects will become even more competitive.
In 10 or 20 years, the electric vehicle market will likely be very similar to that of smartphones today — with the top five brands holding about 70% of the market, Lu said. “Without huge funds, we don’t think we can be the final players.”
After the first car, the next step for Xiaomi is to build its own factories and make the key components in-house, Lu said.
Xiaomi earlier this month announced its new smartphone factory in Beijing had started operations, with production capacity for more than 10 million devices.
For the SU7 car, Chinese government releases currently list a subsidiary of state-owned Baic Group as the manufacturer. Xiaomi told CNBC it didn’t have public information to share at the moment.

Overseas market an ‘amplifier’ for Xiaomi

Similar to an increasing number of Chinese companies, Xiaomi is looking overseas for future growth. For the last six years, between 40% to 50% of the company’s revenue came from outside mainland China, primarily Europe and India.
Lu, who joined Xiaomi Group in 2019, is also president of its international business department and said he spends “a lot of time” on the overseas market.
“It will be the amplifier of Xiaomi’s business,” he said, noting the overseas consumer electronics market is about triple the size of China’s.
As part of his trip to Barcelona for MWC, Lu said he’s visiting Paris, along with Africa and the Middle East.
He acknowledged the political environment makes it more difficult for Xiaomi to go global, but said the company can overcome those challenges by building up in-house capabilities and diversifying the business globally and by product.
As for the car, Lu declined to specify a timeframe for its overseas launch, but said it typically takes two to three years. More

Everywhere you look, stockmarkets are breaking records. American equities, as measured by the S&P 500 index, hit their first all-time high in more than two years in January, surged above 5,000 points in February and roared well above that level on February 22nd when Nvidia, a maker of hardware essential for artificial intelligence (AI), released spectacular results. The same day, Europe’s STOXX 600 set its own record. Even before Nvidia’s results had been announced, Japan’s Nikkei 225 had surpassed its previous best, set in 1989. Little surprise, then, that a widely watched global stockmarket index recently hit an all-time high, too (see chart 1).image: The EconomistThis is quite a turnaround. Stocks slumped in 2022, when faced with fast-rising interest rates, and wobbled last March, during a banking panic. Now, though, both episodes look like brief interruptions in equities’ long march higher. Despite middling economic growth and the covid-19 pandemic, stockmarkets have offered annual returns, after inflation, of more than 8% a year since 2010, including dividends (cash payments to shareholders, funded by company profits) and capital gains (when the price of a share increases). These returns have been better than those produced by bonds and housing. Indeed, they have been better than those produced by just about any other asset class.If the boom has a home, it is America. A hundred dollars invested in the S&P 500 on January 1st 2010 is now worth $600 (or $430 at 2010’s prices). However you measure them, American returns have outclassed those elsewhere. Almost 60% of Americans now report owning stocks, the most since reliable data began to be collected in the late 1980s. Many of them, as well as many professional investors, have a question. Is the stockmarket surge sustainable or the prelude to a correction?For as long as stockmarkets have existed there have been those predicting an imminent crash. But today, in addition to the usual doomsaying, a chorus of academics and market researchers argues that it will be tough for American firms to deliver what is required over the long-term to reproduce the extraordinary stockmarket returns seen in recent years. Michael Smolyansky of the Federal Reserve has written about the “end of an era”, and warned of “significantly lower profit growth and stock returns in the future”. Goldman Sachs, a bank, has suggested that the “tailwinds of the last 30 years are unlikely to provide much boost in the coming years”. Jordan Brooks of AQR Capital Management, a quantitative hedge fund, has concluded that “a repeat of the past decade’s equity market performance would require a heroic set of assumptions.”image: The EconomistThat is, in part, because valuations are already at eye-popping levels. The most closely followed measure of them was devised by Robert Shiller of Yale University. It compares prices with inflation-adjusted earnings over the previous decade—a long enough period to smooth out the economic cycle. The resulting cyclically-adjusted price-to-earnings ratio, or CAPE, has never been higher than 44.2, a record reached in 1999, during the dotcom bubble. The previous peak was in 1929, when the CAPE hit 31.5. It now stands at 34.3 (see chart 2).image: The EconomistRarely have corporate profits been valued so highly. And the outlook for the profits themselves is also challenging. To understand why, consider the fundamental sources of their recent growth. We have employed Mr Smolyansky’s methodology to examine national-accounts data for American corporations. Between 1962 and 1989 net profits increased in real terms by 2% a year. After that, profits accelerated. Between 1989 and 2019 they increased by more than 4% a year. We find similar trends across the OECD, a club of mostly rich countries. As a share of GDP, corporate profits were steady from the 1970s to the 1990s, then doubled (see chart 3).Market of mirrorsYet much of this strong performance is, in a sense, a mirage. Politicians have reduced the tax burden facing corporations: from 1989 to 2019 the effective corporation-tax rate on American firms dropped by three-fifths. Since companies were giving less money to the state, corporate profits rose, leaving them with more money to pass on to shareholders. Meanwhile, over the same period borrowing became cheaper. From 1989 to 2019 the average interest rate facing American corporations fell by two-thirds.Mirroring Mr Smolyansky, we find that in America the difference in profit growth during the 1962-1989 period and the 1989-2019 period is “entirely due to the decline in interest and corporate-tax rates”. Extending this analysis to the rich world as a whole, we find similar trends. The surge in net profits is really an artefact of lower taxes and interest bills. Measures of underlying profits have grown less impressively.Now companies face a serious problem. The decades-long slide in interest rates has reversed. Risk-free interest rates across the rich world are about twice as high as they were in 2019. There is no guarantee that they will fall back to these lows—let alone decline fairly steadily, as they tended to in the decades before the pandemic.As for taxes, the political winds have changed. True, Donald Trump may see fit to cut America’s corporation-tax rate if he wins in November. But our analysis of 142 countries finds that in 2022 and 2023 the median statutory corporate-tax rate rose for the first time in decades. For instance, in 2023 Britain increased its main rate of corporation tax from 19% to 25%. Governments have also established a global minimum effective corporate tax rate of 15% on large multinational enterprises. Once it has bedded in, such companies will probably pay between 6.5% and 8.1% more tax, leaving a smaller pool of net profits.What needs to happen, then, for American stocks to keep offering exceptional returns? One possibility is that investors pay for even more stretched valuations. In a world in which interest and tax bills remain constant for the next decade while real earnings grow at 6% a year—an optimistic scenario—America’s CAPE would need to rise to 51 to reproduce the overall returns seen from 2013 to 2023. That would be higher than it has ever gone before.Now make things grimmer and assume that valuations revert towards their means. The CAPE drifts towards 27, near the average since the end of the dotcom bubble. Assume, too, that interest and tax bills rise. Rather than clocking in at 25% of earnings, they drift up to 35%, or around the level in the first half of the 2010s. In this more realistic world, to generate even half the returns equity investors enjoyed since 2010, real earnings would have to grow at 9% per year. Only twice in the post-war period has America achieved this sort of growth, according to Mr Brooks, and in both cases the economy was rebounding from busts—once from the dotcom bubble and once from the global financial crisis of 2007-09.Many investors hope that ai will ride to the rescue. Surveys of chief executives suggest great enthusiasm for tools that rely on the technology. Some companies are already adopting them, and claim that they are producing transformative productivity gains. If deployed more widely, the tools may allow companies to cut costs and produce more value, juicing economic growth and corporate profits.Play the foolNeedless to say, this is a heavy burden for a technology that is still nascent. Moreover, technological developments are far from the only trend that will affect business in the coming years. Firms face an uncertain geopolitical climate, with global trade flat or declining depending on the measure. In America both parties are sceptical of big business. The battle against inflation is also not yet won: interest rates may not fall as far or as fast as investors expect. In recent decades you would have been foolish to bet against stockmarkets, and timing a downturn is almost impossible. But the corporate world is about to face an almighty test. ■ More

Investor sentiment toward intermediate-term Treasury bonds may be changing.
Schwab Asset Management’s David Botset is seeing more flows into bonds with maturity rates typically between three and five years — and sometimes out to 10 years.

“People are starting to realize that we’re kind of at the peak of interest rate increases,” the firm’s head of innovation and stewardship told CNBC’s “ETF Edge” this week. “So, they’re looking to reposition the fixed-income portion of their portfolio to take advantage of where interest rates are likely to go next.”
It’s a shift from last year when short-term bonds and money market funds saw large inflows. Unlike 2023, more investors are trying to come up with a game plan for when the Federal Reserve lowers rates — which could happen as soon as this year.
“When interest rates come down at such point, you not only get the income from that [intermediate-term] bond, you get price appreciation because yields and prices of bonds are the inverse,” said Botset.
In the middle of the yield curve, he added, it’s “less likely for [rates] to come down, and you’ll be able to capture that yield for a longer period of time.”
But Nate Geraci, The ETF Store president, cautions against betting too heavily on the Fed’s next move.

“Taking on some duration risk makes sense, but I wouldn’t go too far out on the curve,” he said. “The risk-return dynamics [of] getting too far out on the long end don’t make a ton of sense to me.”

‘Not a sure thing’

Geraci believes the Fed’s battle against inflation isn’t over, and that could change the timeline for rate cuts.
“If you’re starting to go out on the curve, you’re making the bet that the Fed is actually going to get everything right this time. And they very well may… but that’s not a sure thing,” Geraci said. “Inflation data could still continue to come in hot. The last print we saw was higher than the market anticipated. So, the Fed may stay higher for longer, and I just think you have to be cognizant of that as an investor.”
Disclaimer More

“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Buffett wrote.
“Outside the U.S., there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance,” Buffett said.

Warren Buffett and Charlie Munger at press conference during the Berkshire Hathaway Shareholders Meeting in Omaha, Nebraska, April 30, 2022.

Berkshire Hathaway’s Warren Buffett said his sprawling conglomerate may only slightly outperform the average American company due to its sheer size and the lack of buying opportunities that could make an impact.
The Omaha-based giant — owner of everything from BNSF Railway to Dairy Queen and 6% of Apple — has by far the largest net worth recorded by any American business and now reached 6% of that of the total S&P 500 companies, Buffett said in his annual letter released Saturday.

“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Buffett wrote. “Some we can value; some we can’t. And, if we can, they have to be attractively priced.”
The last sizable deal Berkshire did was buying insurer and conglomerate Alleghany for $11.6 billion in 2022. The “Oracle of Omaha” has also acquired a 28% stake in energy giant Occidental Petroleum, while ruling out buying the whole company. These moves, while significant, didn’t live up to the expectation of an “elephant-sized” target that Buffett has been wanting to make for years.
Berkshire held a record $167.6 billion in cash in the fourth quarter.
“Outside the U.S., there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance,” Buffett said.
Berkshire did build a 9% stake in five Japanese trading companies — Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo, which Buffett intends to own long term.

The 93-year-old Buffett said Berkshire’s group of diversified, quality businesses should provide “slightly better” performance than the average U.S. company, but anything more than that is unlikely.
‘With our present mix of businesses, Berkshire should do a bit better than the average American corporation and, more important, should also operate with materially less risk of permanent loss of capital,” Buffett said. “Anything beyond ‘slightly better,’ though, is wishful thinking.”
Berkshire recently hit consecutive record highs, trading above $620,000 for Class A shares and boasting a market value above $900 billion.
The conglomerate’s stock has gained about 16% in 2024, more than double the S&P 500′s return, after climbing 16% in all of 2023. More

Berkshire Hathaway posted operating earnings — which refers to profits from businesses across insurance, railroads and utilities — of $8.481 billion in the fourth quarter.
Operating earnings rose to $37.350 billion in 2023, up 17% from $30.853 billion in the prior year.
Berkshire held $167.6 billion in cash in the fourth quarter, a record level that surpasses the $157.2 billion the conglomerate held in the prior quarter.

Warren Buffett ahead of the Berkshire Hathaway Annual Shareholder’s Meeting in Omaha, NE.
David A. Grogan | CNBC

Berkshire Hathaway on Saturday reported a big rise in operating earnings in the fourth quarter, thanks to huge gains in its insurance business, while its cash pile expanded to record levels.
The Omaha-based conglomerate posted operating earnings — which refers to profits from businesses across insurance, railroads and utilities — of $8.481 billion in the quarter ending December. That’s 28% above the $6.625 billion from the year-ago period.

For the full year 2023, that brought operating earnings up to $37.350 billion, up 17% from $30.853 billion in the prior year.
Berkshire also held $167.6 billion in cash in the fourth quarter, a record level that surpasses the $157.2 billion the conglomerate held in the prior quarter.
Berkshire Class A shares have rallied roughly 16% this year.

Stock chart icon

Berkshire Hathaway Class A shares

Geico, the auto insurer considered Buffett’s “favorite child,” reported a profitable year, with net underwriting earnings of $5.428 billion in 2023. The improved earnings was driven by premium rate increases and lower claims last year.
Meanwhile, Burlington Northern Santa Fe (BNSF) reported full-year net earnings of $5.087 billion last year, a 14% drop from $5.946 billion in the prior year.

Insurance underwriting surged to $848 million in the fourth quarter, spiking 430% from $160 million from the year-ago period, driving operating earnings for the conglomerate.
Insurance investment income also rose to $2.759 billion on a quarterly basis, up 37% from $2.0 billion in the same period in the year prior.
But operating earnings from railroads fell in the fourth quarter, as it did in utilities and energy. Operating earnings from railroads dropped to $1.355 billion, down from $1.469 billion a year ago. Operating earnings for utilities and energy fell to $632 million, down from $739 million the prior year.
Overall Berkshire earnings, which include the company’s investment gains from publicly traded companies, more than doubled during the quarter from the year-earlier period, reaching $37.57 billion. For the full year, overall profits came in at $96.22 billion.
The conglomerate, however, included its usual disclaimer advising investors to look past fluctuations in quarterly results.
“We believe that investment gains and losses on investments in equity securities, whether realized from dispositions or unrealized from changes in market prices, are generally meaningless in understanding our reported periodic results or evaluating the economic performance of our operating businesses,” read a statement in the annual report. More

Warren Buffett tours the grounds at the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska.
David A. Grogan | CNBC

Warren Buffett shared a heartfelt tribute to the late Charlie Munger, calling his business partner of 60 years the architect of today’s Berkshire Hathaway.
In his must-read annual letter Saturday, the 93-year-old “Oracle of Omaha” detailed Munger’s instrumental role in helping him expand his conglomerate and reflected on his fruitful and loving relationship with his right-hand man.

“In reality, Charlie was the ‘architect’ of the present Berkshire, and I acted as the ‘general contractor’ to carry out the day-by-day construction of his vision,” Buffett wrote. “Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades. In a way his relationship with me was part older brother, part loving father.”
Munger died in November, about a month shy of his 100th birthday. Munger’s investment philosophy rubbed off on a young Buffett, giving rise to the sprawling conglomerate worth $900 billion today. Buffett reminisced the beginning of acquiring Berkshire, then a textile mill, and how Munger instilled a blueprint in him to transform the company.
“Charlie, in 1965, promptly advised me: ‘Warren, forget about ever buying another company like Berkshire. But now that you control Berkshire, add to it wonderful businesses purchased at fair prices and give up buying fair businesses at wonderful prices. In other words, abandon everything you learned from your hero, Ben Graham. It works but only when practiced at small scale.’ With much back-sliding I subsequently followed his instructions,” Buffett wrote in the letter.
Buffett studied under fabled father of value investing Benjamin Graham at Columbia University after World War II and developed an extraordinary knack for picking cheap stocks. It was Munger who made him realize this cigar-butt investing strategy could only go so far, and if he wanted to expand Berkshire in a significant way, it wouldn’t be enough.
“Many years later, Charlie became my partner in running Berkshire and, repeatedly, jerked me back to sanity when my old habits surfaced,” Buffett said. “Until his death, he continued in this role and together we, along with those who early on invested with us, ended up far better off than Charlie and I had ever dreamed possible.”

The Omaha-based conglomerate — owner of everything from Geico insurance to BNSF Railway to Dairy Queen ice cream — recently touched consecutive record highs, trading above $620,000 for Class A shares and boasting a market value above $900 billion.
“Berkshire has become a great company. Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect,” Buffett said. More

Buffett Watch

Berkshire Hathaway Portfolio Tracker

Warren Buffett tours the floor ahead of the Berkshire Hathaway Annual Shareholder’s Meeting in Omaha, NE.
David A. Grogan | CNBC

Warren Buffett released Saturday his annual letter to shareholders.
In it, he renders a tribute to his longtime friend and right hand man Charlie Munger, who died late in 2023. He also discusses his outlook for the company. Check out the PDF below for the full letter: More

Credit card interest rates are at all-time highs.
Consumers who carry a balance paid an average annual percentage rate of 22.8% at the end of 2023, according to federal data.
APRs have jumped as the Federal Reserve has raised borrowing costs.
Issuers have also been increasing their profit margins, according to the Consumer Financial Protection Bureau.

Runstudio | The Image Bank | Getty Images

Credit card interest rates have ballooned to record highs in recent years — and the growing portion of the formula that generates profit for card issuers is partly to blame, according to a new analysis by the Consumer Financial Protection Bureau.
The average consumer paid a 22.8% interest rate on their credit card balance at the end of 2023, the highest since the Federal Reserve began tracking data in 1994.

Interest charges, expressed as an annual percentage rate, are up about 10 points in the past decade, from 12.9%. Total credit card debt and average balances are also at record highs.
“By some measures, credit cards have never been this expensive,” wrote CFPB’s Dan Martinez, senior credit card program manager, and financial analyst Margaret Seikel.
More from Personal Finance:Here are some ways to maximize your financial aid for collegeWith mortgage rates high, renting is less expensive than buyingHere’s how to avoid unexpected fees with payment apps

Credit card issuers have raised ‘APR margins’

Credit card APRs began moving sharply higher in 2022 as the Fed raised its benchmark interest rate to tame inflation. Interest rates on credit cards — and other consumer loans — generally move in tandem with Fed policy, according to a barometer known as the “prime rate.”
However, credit card companies have also simultaneously raised their average “APR margin,” according to the CFPB.

APR margin is the difference between the total APR and the “prime rate.” It’s a proxy for card issuers’ profits commensurate with their lending risk, the CFPB said.
Those margins are at record highs. They averaged 14.3% in 2023, up from 9.6% in 2013, according to the watchdog’s analysis, issued Thursday.
Almost half the increase in total credit card interest rates in the past decade is due to issuers raising their APR margins, the analysis said.

However, the CFPB authors questioned if those higher profits were justified since issuers don’t seem to be taking more risk by extending credit to more consumers with lower credit scores, for example.
The share of consumers with “subprime” credit scores who hold a credit card has been “relatively stable,” they said.
Major credit card issuers got $25 billion in extra interest by raising their average APR margin over the past 10 years, the CFPB estimated. The average consumer with a $5,300 balance across credit cards would have paid an extra $250 in 2023 due to this increase, the agency said.
“Increases to the average APR margin … have fueled issuers’ profitability for the past decade,” Martinez and Seikel wrote. “Higher APR margins have allowed credit card companies to generate returns that are significantly higher than other bank activities.”

Risk may be a factor, too

The Consumer Bankers Association, a trade group that represents credit card and other financial companies, disputed the CFPB’s characterization of margins and profits.
“The CFPB claims that rising credit card interest rates over the past decade have been against a background of a ‘relatively stable share of cardholders with subprime credit scores,'” CBA president and CEO Lindsey Johnson said in a written statement. “This simply isn’t true.”
For example, about 42% of “deep subprime” borrowers had a credit card as of year-end 2022, its highest point since at least 2013, according to CFPB data. “Deep subprime” borrowers have the worst credit relative to other groups. Their credit scores are below 580.

“Lenders will only lend at a rate at which they’re compensated for the risk they’re taking,” said Greg McBride, chief financial analyst at Bankrate.
The shares of other “below-prime” borrowers — “near-prime” and “subprime” consumers — holding a credit card have been relatively flat for the past several years, according to CFPB data. Their credit scores range between 580 and 659.
Credit card delinquencies may be an additional risk factor driving card issuers’ rationale to raise margins, McBride said.
For example, “serious” card delinquencies — payments that are 90 days or more overdue — have increased across all age groups, a signal of financial stress, according to the Federal Reserve Bank of New York.
About 9.7% of credit card balances were seriously delinquent in Q4 2023, up from 7.7% a year earlier. While up in recent months, the current share of seriously delinquent balances is flat relative to 2013.

Industry concentration may also play a role

However, industry concentration is another reason card companies may have raised APR margins, McBride said.
“A greater concentration of market share does tend to produce greater pricing power,” he said. That’s also generally the case for all sorts of industries, including airlines and cable companies, he added.
Large lenders account for most of the credit card market. The 10 biggest control 83% of it, according to CFPB data.
There may be additional consolidation soon. This week, Capital One Financial announced a $35.3 billion acquisition of Discover Financial. They’re among the nation’s biggest credit card issuers. The merger still requires regulator approval.

How to manage credit card interest

There’s a way consumers can sidestep higher interest rates entirely. For instance, consumers can pay credit card bills on time and in full each month, according to experts.
In other words, don’t carry a balance. Such cardholders won’t pay interest. Importantly, making a card’s minimum monthly payment doesn’t equate to paying one’s bill in full.
Paying in full and on time each month is also a good way to raise one’s credit score, which may make lower-interest-rate cards available to consumers, McBride said.
Consumers with good credit may also be able to transfer an existing balance to a new credit card with a 0% APR introductory offer, McBride said. Some issuers are currently extending such 0% offers for up to 21 months, which “gives you quite a runway to get the debt paid off without the headwind of high interest rates,” he said.Don’t miss these stories from CNBC PRO: More