The Federal Reserve is expected to hold interest rates steady at the end of next week’s two-day meeting, despite some encouragement news about inflation.
Inflation recedes last month, but the escalating trade war threatens prices to rise in a wide range of consumer goods ahead.
“This could just be the beginning of European tariffs and universal tariffs we will work together over the next few weeks,” said Andrzej Skiba, our bond at RBC Global Asset Management, in an email. “This is inflation and the Fed probably won’t cut fees in this environment.”
Federal fund rates set out what banks charge each other for lending overnight, but also affect many of the many borrowing and savings rates Americans see every day.
“Consumers are growing and stressed,” said Greg McBride, chief financial analyst at Bankrate.com.
As federal funding rates drop, consumers may see borrowing costs decrease with a range of consumer debt, including car loans, credit cards and mortgages, and borrowing money cheaper.
But for now, households have been able to see some relief, even if the Fed is on the sidelines. Mortgages, car loans and credit cards are already low. Still, these rates remain relatively upward compared to recent highs, with credit card APRs down slightly from their all-time highs.
Let’s take a look at where the borrowing costs for consumers are.
Home loan
The mortgage rates for 15 and 30 years are fixed, mostly linked to Treasury yields and the economy, but the rate has been low for a few weeks.
The increased uncertainty over the potential recession and increased uncertainty over President Donald Trump’s tariff plans have worsened and reduced consumer outlook, according to the Mortgage Banks Association.
“The good news is that mortgage fees have fallen despite the Fed stepping out of gas when it comes to interest rate cuts,” said Matt Schultz, chief credit analyst at LendingTree.
According to Bankrate, the average rate for fixed-rate mortgages for 30 years has fallen 6.77% from 7.04% at the start of the year.
Credit Card
Most credit cards have variable rates, so they are directly connected to the Fed’s benchmarks.
However, the central bank has held interest rates at the past few meetings, but the average annual rate has also been lower. Thanks to the prolonged impact of last year’s interest rate cuts, it has dropped from 20.27% earlier this year to 20.09%.
“March was the sixth monthly decline, but the decline fell as Bed rate cuts came back further in the rearview mirror,” Schulz said of credit card APR.
In the meantime, credit card debt continues to be a problem for consumers who are struggling to keep up with high prices. Revolving debt, which mainly includes credit card balances, has increased by 8.2% year-on-year, while non-revolving debt, such as car and student loans, is 3% higher, according to the Federal Reserve’s latest consumer credit report.
Automatic loan
Although car loan rates are fixed, these payments continue to rise as car prices rise, in addition to pressure from uncertainty in trade policy.
“That’s annoying news for potential car buyers. They’re already plagued by all aspects at high prices and high prices, and the tariffs are facing the possibility that the costs of cars could even be pushed higher,” Schultz said.
However, car loan fees have also fallen from recent highs. According to Bankrate, the average five-year new car loan fee was 7.42%, down from 7.53% in January.
Student loan
Federal student loan fees are also fixed, so most borrowers have some protection from the Fed’s moves and recent economic turmoil.
Undergraduates who earned direct federal student loans between 2024 and 25 will pay 5.50% to 6.53% in 2023 and 24. Interest rates for the next grade are based in part on the 2010 Ministry of Finance’s May auction.
Private student loans tend to have variable rates tied to Prime, Treasury bills, or another rate index.
Save money
Conversely, according to Bankrates, the best online savings accounts offer the best returns in over a decade, and now pay an average of 4.4%.
The Fed is stable, but “the savings rate hasn’t really changed that much, but that’s good news,” said McBride of Bankrate. “Savings rates remain attractive levels, and the highest yields are still well above inflation.”