Credit card interest rates are in the news. Leaving aside calls to fix rates at lower levels, and the consequences thereof, what is interesting is where they are—near record highs—and how they got there.

The primary reason: The Fed's sharp post-Covid rate rises trying to slash inflation. This raised the prime rate and forced issuers to raise variable APRs. Incrementally more pressure came from lenders widening their margins to cover risk and sustain profits.