Fed interest rate decision: Live updates

The key interest rate is currently around 4.8 percent. In order to curb inflation, the Fed raised its key interest rate from almost zero to 5.33 percent in a series of increases starting in March 2022. Since then, prices have cooled significantly and the Fed moved to cut interest rates last month. Central bankers have announced two more interest rate cuts by the end of the year and more in 2025.

But that course might be less clear. Stronger economic data, coupled with new President Donald J. Trump’s potentially pro-inflationary policies, could make further cuts unnecessary.

Here’s what to watch out for in five key areas of your financial life as interest rates fall now – and perhaps even more in the coming months.

Automatic tariffs

What happens now: While car rates and car prices have trended down, they still remain high, making affordability a challenge. Dealers are offering more incentives and discounts to attract buyers and this is expected to continue.

Auto loans typically resemble the yield on the five-year Treasury note, which is influenced by the Fed’s interest rate. But other factors also determine how much borrowers actually pay, including your credit rating, the type of vehicle, the loan term and the down payment. Lenders also consider the amount of car loans that are past due. As these rise, interest rates also rise, making it more difficult to qualify for a loan, especially for those with lower credit scores.

“If delinquencies go down, not only will interest rates on auto loans go down, but more people would have access to credit,” said Erin Keating, executive analyst at Cox Automotive.

According to Edmunds, an auto shopping website, the average interest rate on new car loans was 7 percent in October, down from 7.6 percent in the same month in 2023 and up from 6.3 percent in 2022. The interest rates for Used cars were higher: The average loan was 11.1 percent in October, slightly lower than 11.6 percent last October but higher than October 2022’s 9.6 percent.

Where and how to shop: Once you’ve set your budget, get pre-approved for a car loan from a credit union or bank (Capital One and Ally are two of the largest auto lenders) so you have a reference point to compare financing available through the dealer if needed go this way. Always negotiate the price of the car (including all fees), not the monthly payments, which can obscure the loan terms and the total amount you will pay over the life of the loan.

Credit cards

What happens now: The interest rates you pay on your balances should decrease after the Fed intervenes, although perhaps not immediately and depending on the card issuer. According to Federal Reserve data, the average interest rate when banks set interest on deposits was 23.37 percent in August.

However, a lot depends on your credit score and the type of card you have. Rewards cards, for example, often charge above-average interest rates.

Where and how to shop: This year, the Consumer Financial Protection Bureau sent out an alert to inform people that interest rates at the 25 largest credit card issuers were 8 to 10 percentage points higher than those at smaller banks or credit unions. For the average cardholder, that can mean up to $400 to $500 more in interest each year.

Consider looking for a smaller bank or credit union that may offer you a better deal. Many credit unions require you to work or live in a certain location to qualify for membership. However, some larger credit unions may have more relaxed rules.

Before you make any move, call your current card issuer and ask them to find the best interest rate you’ve found in the market that you’ve already qualified for. And when you transfer your balance, pay close attention to the fees, whether your original interest rate is expiring, and if so, how much it might increase to.

Mortgages

What happens now: Mortgage rates were volatile. After falling to 6.08 percent at the end of September, interest rates reversed course and reached their highest level since the beginning of August.

30-year fixed mortgage rates do not move in lockstep with the Fed’s benchmark, but generally follow the 10-year Treasury yield, which is influenced by a variety of factors, including inflation expectations, Fed actions and how investors react.

The average interest rate on a 30-year fixed-rate mortgage was 6.79 percent as of Thursday, up from 6.72 percent the previous week but down from 7.5 percent this time last year.

Other home loans are more tied to the central bank’s decisions. Home equity lines of credit and adjustable-rate mortgages – which have variable interest rates – generally adjust within two billing cycles of a change in Fed interest rates.

Where and how to shop: Potential home buyers should obtain multiple mortgage rate quotes from different mortgage brokers, banks and credit unions on the same day as interest rates fluctuate.

These include: the price you pay; any discount points, which are optional fees that buyers can pay to “buy down” their interest rate; and other items such as lender-related fees. Look at the “annual percentage rate” that typically includes these items to get a direct comparison of your total costs for different loans. Just ask what is included in the APR

Savings accounts and CDs

What happens now: The change in interest rates may be most disappointing for savers, who have benefited from higher returns on everything from online savings accounts and certificates of deposit to money market funds. These are all expected to fall slightly in line with the Fed’s move, but some providers could move faster than others. This usually depends on whether the bank wants to attract new customers through more attractive returns than what its competitors are offering.

However, you can safely assume that the high yield online savings account still offers more competitive interest rates than traditional commercial banks, whose returns have remained paltry during this period of higher interest rates. According to Bankrate, the national average interest rate for savings accounts was 0.57 percent at the end of October.

Where and how to shop: Interest rates are one consideration, but you should also look at the provider’s history, minimum deposit requirements, and any fees (high-yield savings accounts typically don’t charge fees, but other products like money market funds do). DepositAccounts.com, part of the online lending marketplace LendingTree, tracks interest rates from thousands of institutions and is a good starting point for comparing providers.

If you’re considering certificates of deposit, now is probably the time to lock in a decent interest rate if you haven’t already. According to DepositAccounts.com, online one-year CDs averaged 3.77 percent as of early November.

Check out our colleague Jeff Sommer’s recent columns for more insights into money market funds. The return on the Crane 100 Money Fund Index, which tracks the largest money market funds, was 4.63 percent on Wednesday, down from 5.13 percent at the end of July.

Student loans

What happens now: There are two main types of student loans. Most people turn to federal loans first. Their interest rates are fixed for the entire life of the loan, they are much easier to get for teenagers and their repayment terms are more generous.

Current interest rates are 6.53 percent for undergraduate students, 8.08 percent for unsubsidized loans for graduate students, and 9.08 percent for the PLUS loans, which are used by both parents and graduate students. Interest rates reset on July 1 each year and follow a formula based on the May 10-year Treasury auction.

Private student loans are something of a wild card. Students often need a co-signer, rates can be fixed or variable, and much depends on your credit score.

Where and how to shop: Since many banks and credit unions have nothing to do with student loans, you should do extensive research, including lenders that specialize in private student loans.

You will often see online advertisements and websites offering interest rates from each lender that can vary by around 15 percentage points. Therefore, you will need to provide some information before receiving an actual price quote.