Your Money: What It Means
- The federal Reserve announced Wednesday it would maintain current interest rates,a decision arriving despite pressure from President Donald Trump to lower them.
- Powell has indicated that rates are likely to remain elevated due to ongoing economic shifts and policy uncertainties.greg mcbride, Bankrate's chief financial analyst, noted that the uncertainty surrounding...
- the federal funds rate influences what banks charge each other for overnight lending, which in turn affects borrowing and savings rates for Americans.
The federal Reserve’s decision to hold interest rates steady directly impacts your finances. This article breaks down how the Fed’s stance affects credit cards, mortgages, student loans, auto loans, and savings accounts. Discover how prevailing high interest rates influence everyday spending and the potential for inflation-beating returns on savings. News Directory 3 presents a clear analysis of these crucial economic factors. Explore your financial landscape and learn how to navigate these changes to secure your financial future. What strategies can you implement? Discover what’s next for your money.
Fed Holds Rates Steady: How It Impacts Credit Cards,Loans,and Savings
Updated June 18,2025
The federal Reserve announced Wednesday it would maintain current interest rates,a decision arriving despite pressure from President Donald Trump to lower them. Trump has repeatedly criticized Fed Chair Jerome Powell, arguing that higher rates hinder economic growth by making it more expensive for businesses and consumers to borrow money.
Powell has indicated that rates are likely to remain elevated due to ongoing economic shifts and policy uncertainties.greg mcbride, Bankrate’s chief financial analyst, noted that the uncertainty surrounding tariffs and their potential impact on inflation is keeping the central bank cautious.
the federal funds rate influences what banks charge each other for overnight lending, which in turn affects borrowing and savings rates for Americans. While the Fed lowered its benchmark rate three times in 2024, consumer rates have remained high.
“Borrowing rates are high, with mortgage rates near 7%, many home equity lines of credit in double-digit interest rate territory, and the average credit card rate still above 20%,” McBride said. “But savers continue to be rewarded with inflation-beating returns on the top-yielding savings accounts, money market accounts, and certificates of deposit. Retirees, in particular, are earning good income on their hard-earned savings.”
Five ways the Fed affects your wallet
1. Credit cards
Because many credit cards have variable rates, they are directly impacted by the Fed’s benchmark. With a rate cut unlikely until at least September, the average credit card APR hovers just above 20%, close to last year’s record high. Some banks have kept rates elevated, even after the Fed’s actions in 2024.
“Interest rates on credit cards are painful because they are so high,” said Charlie Wise, senior vice president and head of global research and consulting at TransUnion.
Wise suggested exploring zero-interest balance transfer cards or consolidating debt with a lower-rate personal loan.
2.Auto loans
Auto loan rates are influenced by several factors,including the Fed’s policies. The average rate on a five-year new car loan was 7.3% in May, near a record high, while used car loans averaged 11%, according to Edmunds.
Car prices are also increasing, partly due to tariffs on imported vehicles, leading to higher monthly payments. According to Bank of America data, 20% of households with car payments pay more than $1,000 per month.
“Every way you slice it, car buyers are struggling to find a deal in today’s car market, and financing a new vehicle is becoming cost-prohibitive for more shoppers,” said Ivan Drury, Edmunds’ director of insights.
3. Mortgages
Mortgage rates are tied to Treasury yields and the overall economy, rather than directly tracking the fed. Concerns about tariffs and economic uncertainty have kept rates relatively stable.
As of June 17, the average rate for a 30-year fixed-rate mortgage was 6.91%, while the 15-year fixed-rate was 6.17%,according to Mortgage News Daily.
“I don’t see any major changes coming in the immediate future, meaning that those shopping for a home this summer should expect rates to remain relatively high,” said Matt Schulz, chief credit analyst at LendingTree.
Adjustable-rate mortgages (ARMs) and home equity lines of credit (HELOCs) are also affected, as they are often pegged to the prime rate.
4. student loans
D3sign | Moment | Getty images
Federal student loan rates are set annually, based on the 10-year Treasury note auction in May, and remain fixed for the loan’s duration. Current rates for undergraduate loans made through june 30 are 6.53%, decreasing to 6.39% starting July 1.
While existing federal student loan rates won’t change, borrowers face other challenges, including fewer loan forgiveness options.
5. savings
While the Fed doesn’t directly control deposit rates, yields tend to correlate with changes in the federal funds rate.
“Yields for CDs and high-yield savings accounts aren’t at the sky-high levels they were a year ago, but they’re still really strong,” said LendingTree’s Schulz. Top-yielding online savings accounts currently pay over 4%, on average, according to Bankrate, exceeding the annual inflation rate.
“Shopping around for high-yield savings accounts, if you haven’t done it already, is one of the best financial moves you can make to take advantage of rates being high,” Schulz said.
What’s next
Economists are closely watching upcoming inflation data and Fed communications for hints about future rate adjustments. Any shifts in the economic outlook could prompt the Fed to reconsider its current stance later in the year.