The Rate-Shock Index: What Each Fed Hike Adds to Credit Card Interest in Every State (2026)
The Fed's September hike raised the prime rate, and every variable-rate credit card with it. We multiplied card debt per person in every state by the change to see what one hike, a full point and a replay of the 2022–23 cycle add to a year of interest.
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📐 Figures verified Sep 28, 2026 against the New York Fed's State Level Household Debt Statistics (end of 2025, published February 2026) and its Household Debt and Credit Report for the second quarter of 2026, the Federal Reserve's prime rate series (FRED DPRIME), its policy-rate history and G.19 consumer credit release. The index assumes a balance carried all year at a variable APR tied to the prime rate.
The Fed's September 16 hike lifted the prime rate to 7.00%, and variable card rates with it. For the average American with a credit report, carrying the typical $4,350 card balance, that adds $10.88 a year in interest. Every full point adds $43.50; replaying the 2022–23 cycle would add $228.38.
Numbers That Matter
| Figure | Amount | Source | Verified |
|---|---|---|---|
| Prime rate | 7.00% since September 17, 2026 (6.75% before the hike) | FRED, DPRIME | Sep 28, 2026 |
| Federal funds target range | 3.75% to 4.00% after the September 16, 2026 hike, the first since 2023 | Federal Reserve | Sep 28, 2026 |
| Credit card debt per person with a credit report | $4,350 at the end of 2025 (U.S.); $5,500 in District of Columbia to $3,030 in Mississippi | New York Fed, February 2026 | Sep 28, 2026 |
| Credit card balances, all borrowers | $1.263 trillion in the second quarter of 2026 | New York Fed Household Debt and Credit Report | Sep 28, 2026 |
| Average APR on card accounts charged interest | 22.15% in the second quarter of 2026 | Federal Reserve G.19 | Sep 28, 2026 |
| The 2022–23 hiking cycle | Prime 3.25% → 8.50%, March 17, 2022 to July 27, 2023 | FRED, DPRIME | Sep 28, 2026 |
What the Numbers Show
- One hike is small per person and large in total. A quarter point adds $10.88 a year on the average balance per person, but across $1.263 trillion of card balances it comes to as much as $3.2 billion a year if every dollar carried interest.
- Where you live changes the bill by about 80%. The index runs from $30.30 per point in Mississippi to $55.00 in District of Columbia. The District of Columbia, Alaska, Hawaii and New Jersey carry the most card debt per person; Mississippi, Kentucky and West Virginia the least.
- Cycles, not single hikes, do the damage. The 2022–23 cycle raised the prime rate 5.25 points in 16 months, the equivalent of 21 quarter-point hikes; at today's balances it would add $228.38 a year per person.
- Borrowers feel it first. Variable card rates follow the prime rate within a billing cycle or two. Savings rates lag: during the 2022–23 cycle, the national average savings rate rose from 0.06% to 0.47% while the prime rate rose 5.25 points (FDIC national rates via FRED).
The Index by State
The Rate-Shock Index is the added yearly card interest per person for each one-point rise in the prime rate: 1% of the state's card debt per person with a credit report. The other columns scale it to the September hike and to a replay of the 2022–23 cycle.
| Rank | State | Card debt per person, end of 2025 | September hike (+0.25) | Index: per 1-point rise | 2022–23 cycle replayed (+5.25) |
|---|---|---|---|---|---|
| 1 | District of Columbia | $5,500 | $13.75 | $55.00 | $288.75 |
| 2 | Alaska | $5,250 | $13.13 | $52.50 | $275.63 |
| 3 | Hawaii | $5,220 | $13.05 | $52.20 | $274.05 |
| 4 | New Jersey | $5,160 | $12.90 | $51.60 | $270.90 |
| 5 | Maryland | $5,090 | $12.73 | $50.90 | $267.23 |
| 6 | Nevada | $5,060 | $12.65 | $50.60 | $265.65 |
| 7 | Florida | $5,050 | $12.63 | $50.50 | $265.13 |
| 8 | California | $5,000 | $12.50 | $50.00 | $262.50 |
| 9 | Connecticut | $4,960 | $12.40 | $49.60 | $260.40 |
| 10 | Colorado | $4,910 | $12.28 | $49.10 | $257.78 |
| 11 | New York | $4,820 | $12.05 | $48.20 | $253.05 |
| 12 | Virginia | $4,770 | $11.93 | $47.70 | $250.43 |
| 13 | Massachusetts | $4,650 | $11.63 | $46.50 | $244.13 |
| 14 | Washington | $4,640 | $11.60 | $46.40 | $243.60 |
| 15 | Texas | $4,620 | $11.55 | $46.20 | $242.55 |
| 16 | Georgia | $4,610 | $11.53 | $46.10 | $242.03 |
| 17 | Arizona | $4,530 | $11.33 | $45.30 | $237.83 |
| 18 | Delaware | $4,520 | $11.30 | $45.20 | $237.30 |
| 19 | New Hampshire | $4,500 | $11.25 | $45.00 | $236.25 |
| 20 | Rhode Island | $4,490 | $11.23 | $44.90 | $235.73 |
| 21 | Illinois | $4,260 | $10.65 | $42.60 | $223.65 |
| 22 | Utah | $4,260 | $10.65 | $42.60 | $223.65 |
| 23 | North Carolina | $4,160 | $10.40 | $41.60 | $218.40 |
| 24 | South Carolina | $4,090 | $10.23 | $40.90 | $214.73 |
| 25 | Oregon | $4,030 | $10.08 | $40.30 | $211.58 |
| 26 | Minnesota | $3,990 | $9.98 | $39.90 | $209.48 |
| 27 | Wyoming | $3,990 | $9.98 | $39.90 | $209.48 |
| 28 | North Dakota | $3,970 | $9.93 | $39.70 | $208.43 |
| 29 | Pennsylvania | $3,950 | $9.88 | $39.50 | $207.38 |
| 30 | Idaho | $3,870 | $9.68 | $38.70 | $203.18 |
| 31 | Montana | $3,850 | $9.63 | $38.50 | $202.13 |
| 32 | Vermont | $3,790 | $9.48 | $37.90 | $198.98 |
| 33 | Maine | $3,760 | $9.40 | $37.60 | $197.40 |
| 34 | Tennessee | $3,710 | $9.28 | $37.10 | $194.78 |
| 35 | Kansas | $3,670 | $9.18 | $36.70 | $192.68 |
| 36 | Michigan | $3,670 | $9.18 | $36.70 | $192.68 |
| 37 | Nebraska | $3,650 | $9.13 | $36.50 | $191.63 |
| 38 | Louisiana | $3,610 | $9.03 | $36.10 | $189.53 |
| 39 | Ohio | $3,560 | $8.90 | $35.60 | $186.90 |
| 40 | Missouri | $3,550 | $8.88 | $35.50 | $186.38 |
| 41 | South Dakota | $3,530 | $8.83 | $35.30 | $185.33 |
| 42 | New Mexico | $3,520 | $8.80 | $35.20 | $184.80 |
| 43 | Oklahoma | $3,460 | $8.65 | $34.60 | $181.65 |
| 44 | Indiana | $3,410 | $8.53 | $34.10 | $179.03 |
| 45 | Alabama | $3,400 | $8.50 | $34.00 | $178.50 |
| 46 | Wisconsin | $3,400 | $8.50 | $34.00 | $178.50 |
| 47 | Arkansas | $3,310 | $8.28 | $33.10 | $173.78 |
| 48 | Iowa | $3,250 | $8.13 | $32.50 | $170.63 |
| 49 | West Virginia | $3,180 | $7.95 | $31.80 | $166.95 |
| 50 | Kentucky | $3,140 | $7.85 | $31.40 | $164.85 |
| 51 | Mississippi | $3,030 | $7.58 | $30.30 | $159.08 |
| — | United States | $4,350 | $10.88 | $43.50 | $228.38 |
Per person aged 18 or older with an Equifax credit file, from the New York Fed Consumer Credit Panel, a 5% sample subject to sampling variation. Puerto Rico and other territories are not included.
Every Prime-Rate Hiking Cycle Since 1979
Each row is a run of prime-rate increases with no cut in between, from the first hike to the last. The last column is what that rise would add to a year of interest on today's average balance of $4,350 per person.
| First hike | Last hike | Prime rate | Rise (points) | Months | At today's balance |
|---|---|---|---|---|---|
| Jul 27, 1979 | Nov 16, 1979 | 11.50% → 15.75% | +4.25 | 4 | $184.88 |
| Feb 19, 1980 | Apr 2, 1980 | 15.25% → 20.00% | +4.75 | 2 | $206.63 |
| Aug 22, 1980 | Dec 19, 1980 | 11.00% → 21.50% | +10.50 | 4 | $456.75 |
| Apr 24, 1981 | May 22, 1981 | 17.00% → 20.50% | +3.50 | 1 | $152.25 |
| Feb 2, 1982 | Feb 18, 1982 | 15.75% → 17.00% | +1.25 | 0 | $54.38 |
| Aug 8, 1983 | Jun 25, 1984 | 10.50% → 13.00% | +2.50 | 10 | $108.75 |
| Apr 1, 1987 | Oct 7, 1987 | 7.50% → 9.25% | +1.75 | 6 | $76.13 |
| May 11, 1988 | Feb 24, 1989 | 8.50% → 11.50% | +3.00 | 9 | $130.50 |
| Mar 24, 1994 | Feb 1, 1995 | 6.00% → 9.00% | +3.00 | 11 | $130.50 |
| Jul 1, 1999 | May 17, 2000 | 7.75% → 9.50% | +1.75 | 10 | $76.13 |
| Jun 30, 2004 | Jun 29, 2006 | 4.00% → 8.25% | +4.25 | 24 | $184.88 |
| Dec 17, 2015 | Dec 20, 2018 | 3.25% → 5.50% | +2.25 | 36 | $97.88 |
| Mar 17, 2022 | Jul 27, 2023 | 3.25% → 8.50% | +5.25 | 16 | $228.38 |
| Sep 17, 2026 | Under way | 6.75% → 7.00% | +0.25 | — | $10.88 |
The Volcker years stand out: the prime rate climbed 10.5 points in four months in 1980 on its way to 21.5%. Since the mid-1990s, the prime rate has moved in lockstep with the Fed's target, at the top of the target range plus three points, so every Fed hike now lands on card rates in full.
How a Hike Reaches Your Card
Most credit cards carry a variable APR: the prime rate plus a margin set by the issuer. When the prime rate rises, the card's APR rises by the same amount, usually from the next billing cycle or the one after, and the card agreement already allows it, so there is no separate notice period. A card at the second-quarter average of 22.15% moves to about 22.40% after a quarter-point hike.
The increase applies only to balances that carry interest. If you pay the statement balance in full each month, the grace period keeps new purchases interest-free and a hike costs you nothing on the card, while the rate on your savings can rise.
Methodology
Card debt per person is the New York Fed's credit card balance per capita for the fourth quarter of 2025, for people aged 18 and older with an Equifax credit file, from its State Level Household Debt Statistics 2003–2025 (February 2026). The index multiplies that balance by one percentage point; the other columns multiply it by 0.25 points (the September 2026 hike) and by 5.25 points (the 2022–23 cycle). It is a yearly figure on a balance carried all year, with no compounding.
The balances include people who pay in full, so the per-person figures spread interest across everyone with a credit report; someone who carries a balance should scale the index to their own balance ($10 a year per point for every $1,000 carried). Hiking cycles come from the Federal Reserve's daily prime rate series on FRED (DPRIME, from 1979): runs of consecutive increases with no cut in between, totaling at least 0.75 points, plus the run that began September 17, 2026. The national total multiplies the $1.263 trillion of card balances in the second quarter of 2026 by a quarter point, an upper bound because not every balance carries interest.
Worked Example: A $6,000 Balance
- Before the hike: at 22.15%, $6,000 carried for a year costs $1,329 in interest.
- After the September hike: at 22.40%, it costs $1,344: $15 more a year, $1.25 a month.
- If the prime rate rose a full point: $60 more a year.
- If the 2022–23 cycle repeated: 5.25 points would add $315 a year, taking the rate to 27.40%.
Simple yearly interest on a steady balance; real statements compound daily and balances change.
Decision Rules
If this, then that
- If you carry a card balance → expect each Fed hike to raise your APR by the same amount within a cycle or two: $2.50 a year per quarter point for every $1,000.
- If you pay in full every month → hikes don't touch your card costs; move savings where the rate follows the Fed.
- If your balance is large → lock the rate with a true 0% balance transfer or a fixed-rate loan before more hikes.
- If you have a HELOC or other prime-linked debt → net it against your savings in the Rate-Shock Stress Test.
- If the Fed keeps hiking → each quarter point adds the same again; don't wait for cuts to start paying down.
Mistakes to avoid
- Assuming your card APR is fixed; most are variable and tied to the prime rate.
- Paying only the minimum while rates rise.
- Leaving savings in an account paying close to nothing while card rates climb.
- Moving a balance to a deferred-interest offer instead of a true 0% APR.
Related: what a Fed hike changes for savers and borrowers; real interest rates explains rates after inflation; balance transfer strategy shows how to lock a 0% rate; the Credit Card Reality Engine tests rewards against interest; and credit card debt statistics has the latest national figures.