What the Fed’s Moves Mean for Mortgages, Credit Cards and Savings

While the Federal Reserve is expected to keep its key interest rate unchanged on Wednesday, American households will want to know whether rate cuts are on the horizon, which could have meaningful implications for their monthly budgets.

The central bank has already raised its benchmark rate to 5.25 to 5.50 percent, the highest level in more than two decades, in a series of increases over the past two years. The goal was to rein in inflation, which has cooled considerably. Fed officials have kept rates steady since July as they continue to monitor the economy.

It has remained robust, which means policymakers might take their time before pivoting to rate cuts. But some banks have already started reducing the rates they pay to consumers, including on some certificates of deposit.

Here’s how different rates are affected by the Fed’s decisions — and where they stand.

Credit card rates are closely linked to the central bank’s actions, which means that consumers with revolving debt have seen those rates quickly rise over the past couple of years. (Increases usually occur within one or two billing cycles.) But don’t expect them to fall quite as rapidly.

“The urgency to pay down high-cost credit card or other debt is not diminished,” said Greg McBride, chief financial analyst at Bankrate.com. “Interest rates took the elevator going up, but they’re going to take the stairs coming down.”

That means that consumers should prioritize repayment of higher-cost debt and take advantage of zero-percent and low-rate balance transfer offers when they can.

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