But the goods being bought with the credit cards went up 8%.
Consider before: Bob bought thing X for $100 before and then paid Y% interest on that debt. Now he buys it for $108 and pays (Y+4)% interest. It’s more expensive all around, even if his wages went up by the same 8%.
Sure, but when he as to pay (Y+4)% interest in a year, the money he uses is only 1/1.08=92.5% as valuable as it would be today because today that money buys 8% more than in a year. Thus his effective interest payment is lower (assuming inflation continues, and for simpler numbers pretending like interest payments are yearly and not monthly)
Consider before: Bob bought thing X for $100 before and then paid Y% interest on that debt. Now he buys it for $108 and pays (Y+4)% interest. It’s more expensive all around, even if his wages went up by the same 8%.