Investing

Traders work on the floor of the New York Stock Exchange during morning trading on Nov. 26, 2024.
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Bitcoin exchange traded funds are now the largest holders of the flagship cryptocurrency. 
The 12 spot bitcoin ETFs in existence have collectively passed $100 billion in assets under management, one of the most successful ETF launches in history. 

The funds now own slightly more than 1.1 million bitcoin, equivalent to about 5% of all the bitcoin in existence. 

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Bitcoin in 2024

Collectively, bitcoin ETFs now own more of the cryptocurrency than legendary pseudonymous founder Satoshi Nakamoto, who is believed to control as much as 1.1 million bitcoin. 
Largest bitcoin holders

U.S. Spot ETFs            1,104,534
Satoshi Nakamoto   1,100,000
Binance                        633,000
MicroStrategy             402,100
U.S. Government       198,109
Chinese Government 194,000
Bitfinex                            184,027
Kraken                              158,959
Block One                        164,000
Robinhood                      142,361

Source:  Bloomberg/Eric Balchunas
“Bitcoin ETFs have become the vehicle of choice for bitcoin holders,” Brian Hartigan, global head of ETFs at Invesco, said Monday on CNBC’s “Halftime Report.” 

Bitcoin is now 1% of all ETF assets

Here’s the math: U.S. ETFs now have a little over $10 trillion in assets under management. With spot bitcoin ETFs now accounting for more than $100 billion in assets, bitcoin is now about 1% of the assets under management of the entire ETF universe. 

That 1% is a significant milestone. For years, bitcoin advocates have been looking for ways to convince skeptics they should allocate a small portion of their portfolio to bitcoin. 
A typical argument is that as assets under management have grown, investors should allocate 1% of their portfolio to bitcoin. The argument is that if bitcoin goes bust, losing 1% is no big deal, but the scarcity value of the cryptocurrency leaves it with a bigger chance of increasing in value over time.
It’s now becoming a bit easier to make that kind of argument, with bitcoin accounting for 1% of the assets under management in ETFs.
 “So for people asking that question, if you don’t own it, you’re 1% under allocated to bitcoin,” Hartigan said.

Why have bitcoin ETFs been such a hit?

 The ETFs’ popularity boils down to pent-up demand and an up market.
“I think everything lined up perfectly for these products coming to market,” Nate Geraci, president of The ETF Store, said Monday on “ETF Edge.” “Because, remember, you had over 10 years of pent-up demand here, because the first bitcoin ETF filing was all the way back in 2013, and this has been talked about ad nauseam over the past decade. So I think that created a lot of pent-up demand.”
A relentless up market was the second catalyst. 
“Bitcoin itself has obviously performed very well,” Geraci said, noting that the crypto has more than doubled this year. “That clearly helps. There’s just been a ton of coverage in this space that helps generate investor interest. So all of the ingredients have been there. It’s really been a perfect recipe.”

Bitcoin backers’ hopes for 2025

The bitcoin and ETF industry are expecting even more inflows in 2025 on two hopes. First, they want institutions to loosen investment requirements and permit clients to own and trade bitcoin. Second, they seek a friendlier regulatory environment.
“The ETF has become the liquidity vehicle for holding the digital assets themselves,” Hartigan said on CNBC’s “ETF Edge” program. “It’s liquid, that’s regulated, and I think that really touts the benefits of the ETF. So, hopefully that’s the kind of that intermediary vehicle that we needed to give the institutional marketplace more access to digital coin.”
President-elect Donald Trump’s announcement that venture capitalist David Sacks will be the crypto “czar” and the plan to nominate Paul Atkins to be chair of the U.S. Securities and Exchange Commission has bitcoin enthusiasts believing that a much friendlier regulatory environment is coming.
Atkins, a former Republican SEC commissioner, has been supportive of bringing more regulatory clarity to the crypto market.
“If the SEC were more accommodating and would, you know, deal straightforwardly with these various [crypto] firms, I think it would be a lot better to have things happen here in the United States rather than outside,” Atkins said in a “Kibbe on Liberty” podcast in February 2023. 
In that podcast, Atkins expressed support for a digital currency that is not controlled by the government.
“To have something that is not controlled by any particular entity, is not centralized, is a trustless type of product, where you have all the different miners and validators who are validating different transactions and appending them to the blockchain, makes a lot of sense,” he said.

Will bitcoin ETFs pass gold ETFs in 2025?

With spot bitcoin ETFs now over $100 billion in AUM, Geraci said there is a real chance bitcoin ETFs will pass gold ETFs next year.
“For context, the physical gold ETF category, which has been around for over 20 years, that has about $125 billion in assets [compared to $100 billion in spot bitcoin ETFs],” Geraci said.
“So, it’s not inconceivable to think that spot bitcoin ETFs will surpass gold ETFs sometime over the next several months, which is just astounding when you think about it, when I think about the demand here,” he added. More

Egg prices may approach record highs, just about two years after they peaked during the pandemic era.
Highly pathogenic avian influenza, better known as bird flu, has killed millions of chickens and reduced egg supply. Consumer egg demand is also highest around Thanksgiving and Christmas.
The trajectory of the bird flu outbreak is unclear.

A customer walks by a display of fresh eggs at a grocery store on Sept. 25, 2024 in San Anselmo, California.
Justin Sullivan | Getty Images

It’s déjà vu for grocery shoppers, as the price of those Grade A eggs has spiked in recent months, just two years after egg prices soared to record highs.
The average retail price of eggs in the U.S. has risen 38% since November 2023, according to consumer price index data issued Wednesday. Prices rose 8% last month alone.

A carton of a dozen large Grade A eggs cost $3.65 in November, up from $2.14 a year earlier, according to the U.S. Bureau of Labor Statistics.
There are two primary reasons for the surge: bird flu, which has reduced egg supply, and the strong consumer demand that’s typical around the winter holiday season, according to economists and market analysts.
“There’s a very real chance we could flirt with record highs” for prices, said Brian Moscogiuri, vice president of Eggs Unlimited, an egg supplier.

Grade A egg prices peaked at $4.82 a dozen in January 2023, having jumped from $1.93 in January 2022.
At a time of high pandemic-era inflation, eggs were a standout, with an annual inflation rate of 60% in calendar-year 2022, according to CPI data. They even entered the zeitgeist: Pop star Taylor Swift told comedian Trevor Noah at the Grammy Awards in February 2023 that her fans would “get on it” to help lower egg prices.

How a ‘serious’ bird flu outbreak is affecting egg prices

Now, as in 2022-23, highly pathogenic avian influenza — better known as bird flu — is a big culprit.
Bird flu is a highly contagious and lethal disease among birds, including chickens. The U.S. is in the midst of a “serious outbreak,” Moscogiuri said.
The disease entered the U.S. in late 2021 and has lingered, experts said. Prior to that, the last time bird flu had impacted egg-laying chickens at commercial farms was in 2015, Moscogiuri said.
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About 33 million commercial egg layers have been killed by bird flu in 2024, according to data from the Centers for Disease Control and Prevention.
That has “caused an egg supply shortage,” said Ryan Hojnowski, an egg analyst at Expana, an agricultural market research firm.

Roughly half of the commercial egg layer deaths for 2024 — about 15 million birds — have occurred since Oct. 15, according to CDC data. Wholesale egg prices are up 97% since mid-October, according to Expana.
“If you have one infection, chances are that d— near all the birds are infected, or will be infected in a very short time,” said Andrew Novakovic, a professor of agricultural economics at Cornell SC Johnson College of Business.

Thanksgiving, Christmas holidays raise egg demand

The egg supply shortage is also running headlong into peak season for consumer demand.
“Q4 is when we typically see the strongest demand for eggs as consumers tend to bake around the Thanksgiving and Christmas holidays,” Hojnowski said.
High demand and reduced supply have combined to lift prices, experts said.
“When we get past this holiday effect, I think we’ll see some [price] softening,” Novakovic said.

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But the trajectory is difficult to predict, experts said.
For one, bird flu’s staying power is unclear. There have been recent outbreaks in U.S. dairy cows, and “several recent human cases in U.S. dairy and poultry workers,” the CDC said. As of Dec. 11, the current public health risk was “low,” however, the CDC website said.  
The U.S. Department of Agriculture on Friday issued a federal order requiring testing of U.S. milk supply for bird flu, to help track and contain the virus.
“Like any infectious disease, it’s a little hard to accurately forecast how it’s going to progress,” Novakovic said. More

The economy is doing “exceptionally well” as President-elect Donald Trump gets ready to enter the White House, said Moody’s Analytics chief economist Mark Zandi.
But, Zandi added, “I do think there are some potential storms coming.”

Mark Zandi, chief economist at Moody’s Analytics, testifies during a Senate Budget Committee hearing in the Dirksen Building in Washington, D.C., May 4, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

The economy is doing “exceptionally well” as President-elect Donald Trump gets ready to enter the White House, according to Moody’s Analytics chief economist Mark Zandi.
Zandi, speaking at the Consumer Federation of America’s financial services conference on Wednesday, noted some of the glowing areas: Gross domestic product has been growing at around 3%, productivity and business formation rates are strong, and the stock market is up.

“The economy can weather a lot of storms,” Zandi said.
But, he added, “I do think there are some potential storms coming” next year under the new administration.

Immigration policy, tariffs could affect economy

Zandi expects Trump to act quickly on deporting immigrants and implementing tariffs, two moves that could have profound impacts on the U.S. economy.
“I believe President Trump is going to do what he said he’ll do on the campaign trail,” Zandi said. “He’s going to be quite aggressive in pursuing the policies.”
Immigration has played a big role in the economy’s strength, Zandi said.

Others agree. “Recent immigrants have flowed disproportionately into the parts of the labor force that were particularly tight in 2022, contributing to labor supply in places where it was most badly needed,” Goldman Sachs analysts wrote in a note to clients in May.

Meanwhile, tariffs create “a whole lot of uncertainty for businesses,” Zandi said. As a result, they could lead to job losses.
Tariffs are also likely to affect people’s spending, he said.
“It’s going to mean higher costs for consumers — it’s a tax increase,” Zandi said.
Trump’s universal tariff proposals could cause prices to skyrocket on clothing, toys, furniture, household appliances, footwear and travel goods, according to a recent report from the National Retail Federation.
Trump has said he would impose a 10% or 20% tariff on all imports across the board.
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The NRF found that the impact of the tariffs would be “dramatic” double-digit percentage price spikes in nearly all six retail categories that the trade group examined.
For example, the cost of clothing could rise between 12.5% and 20.6%, the analysis found. That means an $80 pair of men’s jeans would instead cost between $90 and $96.
These new prices would squeeze consumer budgets, especially for low-income households, which spend three times as much of their after-tax income on apparel as high-income households spend, according to the NRF report, which cited Bureau of Labor Statistics data. More

If you’re age 73 or older and retired, the annual deadline for required minimum distributions is approaching, according to the IRS.
Generally, you must start RMDs by age 73. The first due date is April 1 after turning 73, and you must take future RMDs by Dec. 31.
Skipping an RMD or not taking the full amount by the deadline will trigger a 25% penalty.

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Large balances can cause a ‘tax nightmare’

For some investors, bigger pretax accounts can be “a tax nightmare in retirement” when it’s time for RMDs, certified financial planner Derek Williams with Veratis Advisors in Cary, North Carolina previously told CNBC.
Pretax RMDs boost your adjusted gross income, which can cause higher Medicare Part B and Part D premiums, among other tax consequences, he said.

Your RMD is based on your pre-tax retirement balance as of Dec. 31 from the previous year. That means your 2024 RMD uses year-end figures from 2023.

For 2024, the calculation divides your 2023 pretax balance by an IRS life expectancy factor.  
If you skip an RMD or don’t take the full amount by the deadline, you can expect a 25% excise tax on the amount not withdrawn. The penalty falls to 10% if the RMD is “timely corrected within two years,” according to the IRS.
The agency could waive the RMD penalty if the shortfall was due to “reasonable error” and you take “reasonable steps” to correct it. But you must file Form 5329 with a letter of explanation.

Reduce taxes with charitable transfer

If you need to take an RMD and also want to plan a year-end gift to charity, it’s possible to accomplish both with a qualified charitable distribution, or QCD, experts say.
QCDs are transfers from an individual retirement account to a non-profit organization, which “counts against your RMD but doesn’t get added to your taxable income,” according to CFP Michael Lofley with HBKS Wealth Advisors in Stuart, Florida.
Plus, you can use the strategy to score a tax break for charitable gifts, even if you don’t itemize deductions on your tax return, said Lofley, who is also a certified public accountant.
There’s been a higher standard deduction since 2018, and only about 10% of taxpayers itemized tax breaks on 2021 returns, according to the most recent IRS filing data. More

Mortgage lenders want to know if you’re financially capable of paying back the loan and will ask for documents like tax returns, your W-2 and paystubs.
Any money that you earn that isn’t tied to a form like a W-2 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree.
Here’s what to know.

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A number of factors can get your mortgage application denied. So-called “unverifiable income” is one of them. 
Mortgage lenders want to know if you’re financially capable of paying back the loan. One way they’ll do that is by requesting documents like your federal income tax returns, W-2 and current pay stubs, according to Freddie Mac. 

Any money that you earn that isn’t tied to a form like a W-2 or 1099 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree. 
For instance, income you earn from a rental property you own may be tricky for a mortgage lender to verify, he said. The same can be said for things like gifted cash for a down payment or side hustle earnings.
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It’s a more common problem than you might expect.
About 12% of recent prospective homebuyers were denied a mortgage because a lender could not verify their income, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024.
In such instances where you have different forms of income or are self-employed, it may be worth looking into non-conventional mortgage options, said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. 
“The good news is that there are programs available for people who don’t qualify conventionally,” she said. “But it is a little bit more expensive.”
For example, you may have to sustain higher-than-usual mortgage rates.
Here’s what you need to know.

How a non-qualified mortgage works

Some homebuyers who need more flexibility when applying for mortgages could benefit from a non-qualified mortgage, or a Non-QM loan, Cohn said.
Such loans verify income differently. If you’re self-employed, a non-QM lender can use bank statements to calculate the income that may qualify for the loan instead of a pay stub, tax return or W-2, she said.
“They might also look at what kind of assets you have,” Channel said.
Other banks and lenders will accept the most recent 1099 and do not rely upon tax returns if you’re self-employed in a business you own, Cohn said.

But, be careful. While it may be easier to qualify through income, such loans can be more costly, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender. 
“You may have to jump through more hoops in order to get those mortgages,” Channel said.
For example, you may need a higher credit score or be required to provide a bigger down payment.
The loan may also come with a rate higher than that of a conventional loan. That’s because non-QM loans do not follow the criteria of qualified mortgages set by the Consumer Financial Protection Bureau.
In the first half of 2024, the average initial 30-year interest rate for non-QM loans was 6.7%, compared to 6.4% for a qualified loan, according to data from CoreLogic.

A ‘stepping stone’ for unverified income

Non-QM loans are often better suited for those who invest in real estate or wealthy individuals with a number of assets, Channel said.
“In those instances, you can kind of substitute assets for active income,” he said.

Even if you suspect your income will be hard to verify, it’s smart to start with traditional loan options.
If your application for a conventional mortgage is rejected, reach out to your lender and ask why it was denied, he explained.
“Maybe you submitted the wrong year’s W-2 form. Mistakes do happen” Channel said.
But if you’re going through a transition from being employed to self-employed, or starting a new job with a new company, a non-QM loan could be a “stepping stone,” Cohn said.
Once you start to show sufficient income on your returns, you can always apply for a refinance in the future, experts say.
“Just because you take out a non-QM loan doesn’t mean you’re stuck,” Cohn said. More

With college enrollment falling, a growing number of institutions are in financial jeopardy.
As many as 80 colleges and universities may close over the next five years, according to new research by the Federal Reserve Bank of Philadelphia.

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Most people believe in the value of college and, for the most part, institutions of higher education have been able to weather significant financial challenges throughout history.  
But now, the number of colleges set to close in the next five years is expected to spike, a new study found.

Higher education, as a whole, is “facing serious financial headwinds, both due to long-term trends and to the post-pandemic recovery,” according to a working paper by the Federal Reserve Bank of Philadelphia.
“Colleges and universities are facing unprecedented fiscal challenges in today’s economic climate,” the Fed researchers wrote.
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At least 20 colleges closed in 2024, and another nine schools announced they will close in 2025, according to the latest tally by Implan, an economic software and analysis company.
In the worst-case scenario, as many as 80 additional colleges would shut from 2025 to 2029, the Fed analysis found.

College enrollment is down

Not only are fewer high schoolers enrolling in college immediately after graduation but the overall population of college-age students is also shrinking, a trend experts refer to as the “enrollment cliff.”
“One key challenge is declines in enrollment, as the number of students enrolled in degree-granting colleges and universities fell by 15% from 2010 to 2021,” the Fed researchers said.
These days, only about 62% of high school seniors in the U.S. immediately go on to college, down from 68% in 2010, government data shows. Those that opt out are often low-income students, who increasingly feel priced out of a postsecondary education.

As the sticker price at some private colleges nears six figures a year, students have increasingly sought alternatives to a four-year degree, such as joining the workforce or completing certificate programs or apprenticeships.
Ballooning costs have played a large role in a changing mindset, according to Candi Clouse, a vice president at Implan.
“They don’t want to have the student loan debt,” she said.
Experts had also warned that problems with the rollout of last year’s Free Application for Federal Student Aid form would result in fewer students applying for financial aid, which could contribute to declining enrollment.

A wave of colleges in financial crisis

Growing competition for fewer students, higher operating costs and state-imposed restrictions on tuition increases for public colleges have limited institutions’ ability to increase tuition revenue, the Fed report found.
That has left some colleges and universities in a severe financial distress, according Implan’s Clouse.
“We see the decline in national birthrates, rising cost of education and rising cost of operations,” she said. “We see colleges being right-sized.”

At a local level, these closures can be devastating, Clouse added.
“When a school closes, many people are left scrambling,” she said.
On average, each college or university that shuts down affects 265 jobs and $14 million in labor income, according to Implan’s calculations.
“It can be huge for these small cities when they are reliant on an institution that has likely been there for generations,” Clouse said.
During the pandemic, federal funding provided a temporary stopgap for cash-strapped colleges. In the years since, there has been a wave of schools declaring “financial exigency,” according to the Fed.
To stay afloat, some colleges have cut faculty and slashed areas of academic study, including programs in sociology, creative writing, music and religion.
Not all schools are struggling, however. In fact, the country’s most elite institutions are faring better than ever.

College applications are up

Overall, total application volume through Nov. 1 rose 10% for the 2024-25 application season, compared to a year earlier, according to the latest data from the Common Application, although a growing share of applicants only applied to public schools.
Private college is becoming a path for only those with the means to pay for it, other reports show. 

Children from families in the top 1% are more than twice as likely to attend highly selective private colleges, according to the National Bureau of Economic Research, which continues to “amplify the persistence of privilege across generations,” the report found.
Meanwhile costs are still rising, tuition and fees plus room and board for a four-year private college averaged $58,600 in the 2024-25 school year, up from $56,390 a year earlier. At four-year, in-state public colleges, it was $24,920, up from $24,080, according to the College Board, which tracks trends in college pricing and student aid.
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New Year’s Eve through New Year’s Day is the best time of year to buy a used car, because deals are up 47.9%, according to a new analysis by iSeeCars.
“It’s just easier for car dealers to sell in warmer months and harder to sell in colder months,” said Karl Brauer, executive analyst at iSeeCars.

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If you’re in the market for a used car, the best time of the year to buy one is fast approaching.
New Year’s Eve and New Year’s Day are the best days of the year to buy a used car, because there are 47.9% more deals than average, according to a new analysis by iSeeCars, a search engine for used cars. To determine the best and worst times of the year to buy a used car, the site examined 39 million used car sales from 2023 and 2024.

Those dates won out because “you have two forces coming together,” said Karl Brauer, executive analyst at iSeeCars.
Not only are dealers trying to meet their sales goals by the end of the year, but they are also trying to boost transactions as the winter season kicks in. 
“It’s just easier for car dealers to sell in warmer months and harder to sell in colder months,” Brauer said.
Dealership foot traffic declines when temperatures drop, he said. “They have to counter that by offering better deals.” 
To that point, the months with the most deals available for used cars are January, December, February, November and March, iSeeCars found.

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Finding an affordable used car became a challenge in recent years after demand spiked during the pandemic. 
While prices are up 31.4% from $20,683 in the third quarter of 2019, according to Edmunds data, the typical asking price is normalizing as more sellers tack on incentives. 
The growing inventory and the proliferation of incentives among new cars is “trickling down” to the used vehicle market, said Ivan Drury, director of Insights at Edmunds.
In the third quarter of 2024, used vehicle prices dropped to an average $27,177, down 6.2% from $28,960 a year prior, the car shopping site found.
Here’s what you need to know if you’re in the market for a used car, according to experts. 

The best and worst times to buy a used car

Both dealers and car companies are trying to hit sales goals toward the end of December, said Brauer. 
In order to meet those target figures, sellers will “put out extra good deals right at the end of the year on New Year’s Eve,” he said.
But if you can’t fit in a car purchase during the next three weeks, among other year-end tasks and holiday celebrations, mark this date on your calendar: Martin Luther King Jr. Day. This holiday, which falls on Jan. 20 in 2025, is the second-best time of year to buy a used car, with 43.3% more deals than usual, according to iSeeCars. 

Market conditions begin to favor car sellers as the temperature outside heats up — so much so that there are fewer deals available even on key annual holidays.
Mother’s Day sees 27.4% fewer deals than average, followed by Memorial Day at 28%; Juneteenth, 30%, and Fourth of July, 31.1%, per iSeeCars. Father’s Day is the worst day to buy a used car, with 33.1% fewer deals than average.

‘Now there are deals out there’

Unlike a year ago, “now there are deals out there” for used cars, from low interest rate offers on financing to really low sticker prices, said Brauer. 
If you are in the market for a used car, there are three things you need to cross off your to-do list before making a purchase, experts say.
1. Research for sales, discounts and offers
While there are deals out there, they are not across the board, said Drury.
“When it comes to looking for deals, it’s going to vary wildly between make, model and the segment,” he said. 
Shop around at different car sellers and dealers to get a better sense of prices for vehicles in your area. That research can help you negotiate in the transaction, especially at a time when the seller is focused on meeting year-end sales goals.
“You want to make them have to work for your business by potentially beating other dealers,” Brauer said.
2. Ask for the car’s VIN and request an inspection
The vehicle identification number, or VIN, will tell you the car’s history, such as how many owners the vehicle has had over time, its maintenance record and whether it’s been in accidents or had flood damage. 

“You should always get the vehicle history report on a car before you ever buy one,” said Brauer.
Additionally, ask for a pre-purchase inspection, or PPI, from an independent mechanic, he said.
“If the seller won’t let you, that should be pretty telling right there,” he said.
3. Seek financing options
Try to get preapproved for different car loans and financing options from your bank and other lending institutions before visiting dealerships, experts say. This will help you get a better sense of what terms you qualify for. 
Doing so will put you in a position where a dealer may be incentivized to either match the offer or give you a better deal. If not, you can go with the financing from your bank or another lender. More

Although the Federal Reserve started slashing interest rates in September, the average credit card interest rate has barely budged.
For some retail credit cards, interest rates have only gone up. 
In part, card issuers are trying to get ahead of a new federal rule, which caps credit card late fees.

Close-up of unrecognizable black woman opening mail containing new credit card
Grace Cary | Moment | Getty Images

Why some APRs are still rising

Synchrony and Bread Financial, which both issue store-branded credit cards, have said that the moves were necessary following a Consumer Financial Protection Bureau rule limiting what the industry can charge in late fees.
“One of the unintended consequences of trying to impose limits on fees is that it often leads to higher rates,” said Greg McBride, chief financial analyst at Bankrate.com.
Card issuers are mitigating their exposure against borrowers who may fall behind on payments or default, he said.
“Reducing the late fee doesn’t reduce the likelihood of a late payment so issuers are going to compensate for that risk in another fashion.” McBride said.

“It doesn’t surprise me that card issuers would try and get out in front of these changes,” said Matt Schulz, LendingTree’s chief credit analyst. The CFPB’s new rule takes a bite out of what has been a very profitable business.
Further, “stores want to be able to offer that card to anyone who walks up to the checkout counter and there is a fair amount of risk in that,” Schulz said.

How to avoid paying sky-high interest

Only consumers who carry a balance from month to month feel the pain of high APRs. And higher APRs only kick in for new loans, not old debts, as in the case of new applicants for store cards or new purchases.
“Rates are not going up on an existing balance,” McBride said.
APR changes only affect the whole balance if the change is due to a change in the underlying index, such as an increase or decrease in the Fed’s benchmark, he explained.
“Otherwise, if the issuer wants to raise the rate — which would mean increasing the margin over prime rate — they can only do so on an existing balance if the cardholder is 60 days delinquent,” McBride said.
However, credit card delinquency rates are already “elevated,” with 8.8% of balances transitioning to delinquency over the last year, and the share of borrowers with revolving balances rising as more people rack up new debt over the holidays.
Currently, Americans owe a record $1.17 trillion on their cards, 8.1% higher than a year ago, according to the Federal Reserve Bank of New York.

McBride advises consumers against signing up for a store credit card with a high rate during the peak shopping season.
“Store cards are so popular this time of year,” he said. “Having that same-day discount dangled in front of you is tempting, but you lose the benefit of the discount really fast if you start carrying a balance.”
As a general rule, “the best way to avoid these sky-high rates is to pay your bill in full every month — that is easier said than done, but should always be the goal,” Schulz said.
Cardholders who pay their balances in full and on time and keep their utilization rate — or the ratio of debt to total credit — below 30% of their available credit, can also benefit from credit card rewards and a higher credit score. That paves the way to lower-cost loans and better terms going forward.
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