U.S. Federal Reserve Chair Jerome Powell speaks during a press conference, following the issuance of the Federal Open Market Committee’s statement on interest rate policy, in Washington, D.C., U.S., Sept. 17, 2025. <\/p>\n
Elizabeth Frantz | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n
The Federal Reserve<\/a> cut borrowing costs for the second time in a row<\/a> on Wednesday.<\/p>\n Lowering the federal funds rate<\/a>\u00a0by a quarter point puts that benchmark in a range between 3.75%-4.00%. The decision comes amid intense pressure from President Donald Trump<\/a>, who has repeatedly called on Fed Chair Jerome Powell<\/a> to drastically lower rates, arguing that would make it easier for businesses and consumers to borrow and boost the\u00a0economy<\/a>.<\/p>\n The federal funds rate, which is set by the Federal Open Market Committee, is the interest rate<\/a> at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves have a ripple effect on many types of consumer products.<\/p>\n For Americans who are stretched thin, this latest move could bring some relief from high borrowing costs, according to Mark Zandi, chief economist at Moody’s. “Their standard of living has flatlined, and a lot of people are uncomfortable with that,” Zandi said. “Many are borrowing money to supplement their income, and now they are paying interest on that debt.”<\/p>\n<\/div>\n Many shorter-term consumer rates are closely pegged to the\u00a0prime rate<\/a>, which is the rate that banks set and extend to their most creditworthy customers \u2014 typically 3 percentage points higher than the federal funds rate. Longer-term rates are also influenced by inflation<\/a> and other economic factors.<\/p>\n From\u00a0credit cards and car loans to mortgage rates, student debt and savings accounts, here’s a look at how the central bank’s policy could impact the rates you see.<\/p>\n<\/div>\n Credit cards<\/a> are one of the main sources of unsecured borrowing, and 60% of credit card users carry debt from month to month, according to a March report by the\u00a0Federal Reserve Bank of New York<\/a>.<\/p>\n But credit card rates are currently near\u00a0an all-time high<\/a>, averaging more than 20%, according to Bankrate.<\/p>\n Since most\u00a0credit cards<\/a>\u00a0have a variable rate, there’s a direct connection to the Fed’s benchmark. When the Fed lowers rates, the prime rate also comes down and the interest rate on your credit card debt could adjust within a billing cycle or two. Yet even then, credit card APRs will still be at extremely high levels.<\/p>\n<\/div>\n Damircudic | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n When the Fed cut rates in the second half of 2024, lowering its benchmark by a full point by December, the average credit card rate fell by only 0.23%<\/a> over the same period, an analysis by CardRatings\u00a0found.<\/p>\n “A quarter-point rate cut is good, but it doesn’t really change a lot for people carrying a balance on their credit card,” said Stephen Kates, a financial analyst at Bankrate.<\/p>\n When it comes to savings on interest charges, “we are talking about dollars per month,” Kates said. “That’s not nothing, but it’s also not a lot.”<\/p>\n For example, if you have $7,000 in credit card debt on a card with a 24.19% interest rate and pay $250 per month on that balance, lowering the APR by a quarter-point would save about $61 over the lifetime of the loan, according to calculations by Matt Schulz, LendingTree’s chief credit\u00a0analyst.<\/p>\n<\/div>\n Although mortgages<\/a> make up the lion’s share of consumer debt, those longer-term loans are less impacted by the Fed. Both 15- and 30-year mortgage rates are fixed for the life of the loan, so most homeowners won’t be immediately affected by a rate cut.<\/p>\n Mortgages are also more closely tied to Treasury yields and the economy. Still, homebuyers could benefit if the expectation of future cuts puts downward pressure on mortgage rates.<\/p>\n “This presents a tangible opportunity for consumers,” said Michele Raneri,\u00a0vice president and head of U.S. research and consulting at TransUnion.<\/p>\n<\/div>\n For example, with another 25-basis-point reduction, a new home buyer securing a $350,000 mortgage at a 6.75% interest rate could potentially see their monthly payments fall by nearly $150, according to Raneri. “Over time, such savings can significantly ease household budget pressures,” she said.<\/p>\n Other home loans are more closely tied to the Fed’s moves.\u00a0Adjustable-rate mortgages<\/a>, or ARMs, and home equity lines of credit<\/a>, or HELOCs,\u00a0are pegged to the prime rate. Most ARMs adjust once a year, but a HELOC adjusts right away.<\/p>\n<\/div>\n Beyond mortgages and credit card debt, auto loans<\/a> also account for a significant share of household expenses. But the interest rate is only one factor: High prices and Trump’s tariffs<\/a> have worsened the affordability equation for car shoppers.<\/p>\n Since\u00a0auto loan rates, like most mortgages,\u00a0are fixed for the life of the loan, experts say potential car buyers could\u00a0mostly benefit if borrowing costs come down in the future.<\/p>\n “While another 25-basis-point rate cut may not drastically lower monthly payments in today’s high-rate, high-price environment, it could help lift consumer confidence,” said Joseph Yoon, Edmunds’ consumer insights analyst.<\/p>\n<\/div>\n Salesman Walter Silva (R) helps Alexis Lechanet shop for a Ford vehicle at Metro Ford on May 6, 2025 in Miami, Florida.<\/p>\n Joe Raedle | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n “More importantly, it may signal that lenders and automakers are preparing to introduce additional financing incentives as we head into the holiday season,” he said. “For many shoppers who’ve been waiting for the right deal, this could be the moment when more attractive offers finally start to appear.”<\/p>\n<\/div>\n Federal student loan<\/a> rates\u00a0are also fixed. The rate for new loans only resets once a year on July 1, so most borrowers won’t be immediately affected by a rate cut.<\/p>\n Eventually, as rates fall, borrowers with fixed-rate private student loans may be able to refinance into a less expensive loan, according to higher education expert Mark Kantrowitz.<\/p>\n However, refinancing a federal loan into a private student loan will forgo some of the “superior benefits” of federal student loans, he said, such as better deferments and forbearances, as well as the\u00a0income-driven repayment plans<\/a>, loan forgiveness and discharge options that exist for now.\u00a0Trump’s\u00a0“big beautiful bill<\/a>” will\u00a0phase out<\/a> some of those repayment plans\u00a0in 2028.\u00a0<\/p>\n<\/div>\n Also, some private loans have a variable rate tied to the\u00a0Treasury bill or other benchmarks, which means borrowers with variable-rate private student loans may automatically get a lower interest rate in line with the Fed’s move, Kantrowitz said.\u00a0<\/p>\n<\/div>\n For savers<\/a>, it’s more important to take matters into your own hands<\/a> now that the Fed is on a rate-cutting path. While the central bank has no\u00a0direct influence\u00a0on deposit rates, the yields tend to be correlated with changes in the target federal funds rate.<\/p>\n “Yields on high-interest savings accounts and CDs are only going to keep dropping,” said LendingTree’s Schulz.\u00a0“It is likely time to act to lock in today’s high rates.”<\/p>\n For now, top-yielding online savings accounts and one-year\u00a0certificate of deposit<\/a>\u00a0rates\u00a0pay more than 4%,\u00a0according to Bankrate, still above the rate of inflation.<\/p>\n Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n\nRead more CNBC personal finance coverage<\/h2>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
Credit cards<\/h2>\n
Mortgages<\/h2>\n
![\"How](\"https:\/\/image.cnbcfm.com\/api\/v1\/image\/108206520-17593349901759334988-41902392915-1080pnbcnews.jpg?v=1759334989&w=750&h=422&vtcrop=y\")
Auto loans<\/h2>\n
Student loans<\/h2>\n
Savings rates<\/h2>\n
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