{"id":43427,"date":"2026-04-29T18:17:54","date_gmt":"2026-04-29T18:17:54","guid":{"rendered":"https:\/\/financialrush.com\/?p=43427"},"modified":"2026-04-29T18:17:54","modified_gmt":"2026-04-29T18:17:54","slug":"what-that-means-for-consumer-loans","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=43427","title":{"rendered":"What that means for consumer loans"},"content":{"rendered":"

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The Federal Reserve<\/a> held interest rates steady<\/a> at the conclusion of its policy meeting on Wednesday.\u00a0<\/p>\n

In what could be\u00a0Jerome Powell’s<\/a> last as chair<\/a> before President Donald Trump’s yet-to-be-confirmed nominee Kevin Warsh<\/a>\u00a0takes the helm, central bankers maintained the federal funds rate in a target range of 3.5% to 3.75%.\u00a0<\/p>\n

Inflation<\/a>\u00a0has surged\u00a0since the war with Iran began, leaving policymakers with limited room to act, according to Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting. “We’re in a kind of suspended animation \u2014 between Iran and the Fed transition,” Snaith said.<\/p>\n<\/div>\n

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Read more CNBC personal finance coverage<\/h2>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Before the oil shock, inflation<\/a> was holding above the Fed’s 2% target but not worsening. Now the jump in energy costs could have longer-term\u00a0inflationary effects<\/a>, economists say.<\/p>\n

For Americans\u00a0struggling\u00a0in the face of higher gas prices and overall affordability challenges, the central bank’s decision to keep interest rates unchanged does little to ease budgetary pressures. “The cavalry isn’t coming anytime soon,” Snaith said.<\/p>\n<\/div>\n

How the Fed decision impacts you<\/h2>\n
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The Fed’s benchmark sets what banks charge each other for overnight lending, but also has a trickle-down effect on many consumer borrowing and savings rates<\/a>.<\/p>\n

Short-term rates are more closely pegged to the\u00a0prime rate<\/a>, which is typically 3 percentage points above the federal funds rate. Longer-term rates, such as home loans, are more influenced by\u00a0inflation<\/a>\u00a0and other economic factors.<\/p>\n

Credit cards<\/h3>\n<\/div>\n
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Most\u00a0credit cards<\/a>\u00a0have a short-term rate, so they track the Fed’s benchmark.<\/p>\n

After the Fed cut rates three times in the second half of 2025, the\u00a0average annual percentage rate has stayed just under 20%, according to Bankrate. <\/p>\n

“Without Fed rate cuts, there’s not much reason to expect meaningful declines anytime soon, so carrying a balance will remain very expensive,” said Matt Schulz, chief credit analyst at LendingTree.\u00a0<\/p>\n

Mortgage rates<\/h3>\n

Fixed mortgage rates<\/a>, on the other hand, don’t directly track the Fed but typically follow the lead of long-term Treasury rates.\u00a0<\/p>\n

Concerns about how the Iran war will impact the U.S. economy have already pushed the average rate for a 30-year, fixed-rate mortgage up to 6.38% as of Tuesday, from 5.99% at the end of February, according to\u00a0Mortgage News Daily<\/a>.<\/p>\n

That leaves homeowners with existing low mortgage rates “feeling stuck,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Mortgages, more than any other credit type, work on a churn,” she said, referring to how a dip in rates can boost borrowing activity.<\/p>\n

Student loans<\/h3>\n

Federal student loan rates<\/a>\u00a0are also fixed and based in part on the 10-year Treasury note<\/a>, so most borrowers are somewhat shielded from Fed moves and recent economic uncertainty.<\/p>\n

Current interest rates on undergraduate federal student loans made through June 30 are 6.39%, according to the U.S. Department of Education. Interest rates for the upcoming school year will be based in part on the May auction of the\u00a010-year note.<\/p>\n

Car loans<\/h3>\n

Auto loan rates<\/a>\u00a0are tied to several factors, including the Fed’s benchmark. Because financing costs remain elevated, new car buyers are taking on longer loans to keep their monthly payments manageable, according to the latest data from Edmunds<\/a>. <\/p>\n

Even so, with the rate on a five-year new car loan near 7%, the average monthly payment on a new car rose to $773 in the first quarter of 2026,\u00a0an all-time high. <\/p>\n<\/div>\n

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“Car buyers are in a tough spot right now because they’re getting squeezed from both ends: high sticker prices and high interest rates, with neither showing any signs of letting up,” said Joseph Yoon, consumer insights analyst at Edmunds. <\/p>\n

“Until the rate picture shifts, buyers will keep stretching loan terms to make payments work, which only adds to the total cost of ownership down the road,” Yoon said.<\/p>\n

Savings rates<\/h3>\n

While the Fed has no\u00a0direct influence\u00a0on deposit rates, the yields tend to be correlated with changes in the target federal funds rate. So, although rates on certificates of deposit<\/a> and high-yield savings accounts\u00a0have fallen from recent highs, they are holding above the annual rate of inflation.<\/p>\n

For now, top-yielding online savings accounts and one-year\u00a0CD\u00a0rates\u00a0pay around 4%,\u00a0according to Bankrate.<\/p>\n

“Yields on high-yield savings accounts and certificates of deposit are down from their peaks of a few years ago, but they’re still strong compared to what we’ve seen for most of the past decade,” Schulz said.<\/p>\n

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