{"id":16933,"date":"2025-06-19T11:56:13","date_gmt":"2025-06-19T11:56:13","guid":{"rendered":"https:\/\/finderica.com\/?p=16933"},"modified":"2025-06-19T11:56:13","modified_gmt":"2025-06-19T11:56:13","slug":"what-that-means-for-your-money","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=16933","title":{"rendered":"What that means for your money"},"content":{"rendered":"
<\/span><\/p>\n
\n
\n
\n
\n
<\/span><\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
\n

The\u00a0Federal Reserve\u00a0announced Wednesday it will leave\u00a0interest rates\u00a0unchanged.<\/p>\n

The Fed decision came amid demands from President Donald Trump to lower the key borrowing rate benchmark, and escalating attacks on Fed Chair Jerome Powell even hours before the announcement.<\/p>\n

Trump has been pressuring Powell\u00a0for a rate cut, arguing that maintaining a fed funds rate that is too high makes it harder for businesses and consumers to access cash, adding more strain to the U.S. economy.\u00a0But Powell\u00a0has said that the federal funds rate is likely to stay higher as the economy changes and policy is in flux.\u00a0<\/p>\n

That’s enough to keep the central bank on the sidelines, for now, according to Greg McBride, Bankrate’s chief financial analyst. “With the uncertainty around tariffs and how that could impact inflation readings in the month ahead, there’s an ongoing sense of another shoe about to drop,” McBride said.<\/p>\n

More from Personal Finance:<\/strong>
Welcome to the zoo. That’ll be $47 today \u2014 ask again tomorrow
Experts weigh pros and cons of $1,000 Trump baby bonus
How Trump spending bill may curb low-income tax credit<\/p>\n

The federal funds rate sets what banks charge each other for overnight lending, but it also has a domino effect on almost all of the\u00a0borrowing and savings rates\u00a0Americans see every day. \u00a0<\/p>\n

When the Fed hiked rates in 2022 and 2023, the interest rates on most consumer loans\u00a0\u2014 including credit cards,\u00a0auto loans and\u00a0home equity lines of credit \u2014\u00a0quickly followed suit. Even though the central bank lowered its benchmark rate\u00a0three times in 2024, those consumer rates are still elevated, and are mostly staying high, for now.<\/p>\n<\/div>\n

\n

“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.”<\/p>\n<\/div>\n

<\/a>Five ways the Fed affects your wallet<\/h2>\n
\n

1. Credit cards<\/h3>\n

Many\u00a0credit cards\u00a0have a variable rate, so there’s a direct connection to the Fed’s benchmark.<\/p>\n

With a rate cut likely postponed\u00a0until at least September, the\u00a0average credit card annual percentage rate is currently just over 20%, according to Bankrate \u2014 not far from last year’s\u00a0all-time high<\/a>. In 2024, banks raised\u00a0credit card interest rates to record levels and some issuers said they are keeping those higher rates in place.<\/p>\n

“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.<\/p>\n

“The reality is you could drop the fed funds rate by two full basis points and all you are doing is lowering your interest rate from say 22% to 20%,” he said.<\/p>\n

Borrowers are better off switching to a zero-interest balance transfer credit card, or consolidating and paying off high-interest credit cards with a lower-rate\u00a0personal loan,\u00a0experts say.<\/p>\n

2. Auto loans<\/h3>\n

Auto loan rates are tied to several factors, but the Fed is one of the most significant.<\/p>\n

With the Fed’s benchmark holding steady, the average rate on a five-year new car loan was 7.3% in May, near a record high, while the average auto loan rate for used cars was 11%, according to Edmunds.<\/p>\n<\/div>\n

\n

But car\u00a0prices\u00a0are also rising \u2014 in part due to pressure from Trump’s tariffs on imported vehicles \u2014 leaving car buyers with bigger monthly payments and a growing affordability problem. Of those households with a monthly car payment, 20% pay\u00a0more than $1,000 a month<\/a>, according to separate data from Bank of America.<\/p>\n

“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\u00a0of insights.<\/p>\n

3. Mortgages<\/strong><\/h3>\n

Mortgage rates don’t directly track the Fed, but are largely tied to Treasury yields and the economy. As a result, concerns over tariffs and ongoing uncertainty about future costs have kept those rates within the same narrow range for months.<\/p>\n

The average rate for a 30-year, fixed-rate mortgage was\u00a06.91% as of June 17, while the 15-year, fixed-rate was 6.17%, according to Mortgage News Daily.\u00a0<\/p>\n

“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.\u00a0<\/p>\n

Adjustable-rate mortgages, or ARMs,\u00a0and\u00a0home equity lines of credit, or HELOCs,\u00a0are pegged to the prime rate, and those rates are also higher.<\/p>\n

4. Student loans<\/h3>\n<\/div>\n
\n
\n
\n

D3sign | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

\n

Federal student loan rates\u00a0are set once a year, based in part on the last\u00a010-year Treasury note\u00a0auction in May and fixed for the life of the loan, so most borrowers are somewhat shielded from Fed moves and recent economic turmoil.<\/p>\n

Current interest rates on undergraduate federal student loans made through June 30 are 6.53%. Starting July 1, the interest rates will be 6.39%.<\/p>\n

Although borrowers with existing federal\u00a0student debt\u00a0balances won’t see their rates change, many are now facing other\u00a0headwinds\u00a0and fewer\u00a0federal loan forgiveness\u00a0options.<\/p>\n

5. Savings<\/h3>\n

While the central bank has no\u00a0direct influence\u00a0on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.<\/p>\n

“Yields for\u00a0CDs\u00a0and\u00a0high-yield savings accounts\u00a0aren’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\u00a0accounts currently pay more than 4%, on average, according to Bankrate \u2014 well above the annual rate of inflation.<\/p>\n

“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.<\/p>\n

Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The\u00a0Federal Reserve\u00a0announced Wednesday it will leave\u00a0interest rates\u00a0unchanged. The Fed decision came amid demands from President Donald Trump to lower the key borrowing rate benchmark, and escalating attacks on Fed Chair Jerome Powell even hours before the announcement. Trump has been pressuring Powell\u00a0for a rate cut, arguing that maintaining a fed funds rate that is too<\/p>\n","protected":false},"author":1,"featured_media":16934,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[435,104],"class_list":{"0":"post-16933","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-means","9":"tag-money"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/16933","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16933"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/16933\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/16934"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16933"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16933"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}