The rates of interest on credit cards are not justified by default levels, say researchers from the Federal Reserve Bank of New York.

Their paper, published this month, says credit cards currently charge an average of 23%, “far exceeding the rates on any other major type of loan or bond”. The figure is important, they say, because 60% of consumer accounts carry a credit card balance and credit cards are consumers’ main methods of accessing unsecured borrowing.

The authors – Itamar Drechsler