The Federal Reserve is expected to keep its key rate steady on Wednesday for its fifth straight meeting, but an influx of economic data this week may shed light on where rates may be headed later this year.
For now, that means consumers looking to borrow will need to wait a bit longer for better deals on many loans, though savers will benefit from steadier yields on their savings accounts — all of which are influenced by the Fed’s policy.
The central bank has kept its benchmark rate unchanged since January, which has riled President Trump, who has continued to attack the Fed chair, Jerome H. Powell, and demand that he aggressively lower borrowing costs, even going as far as threatening to fire him over it (which legal experts and the chair say he cannot do).
The Fed’s benchmark rate is set at a range of 4.25 to 4.5 percent. In an effort to tamp down inflation, the central bank began lifting rates rapidly — from near zero to above 5 percent — between March 2022 and July 2023. Prices cooled considerably, and the Fed pivoted to rate cuts, lowering rates in September, November and December of last year.
Politicizing the Fed, of course, can be disastrous for the broader economy and consumers, and experts say they’re already worried about the independence of the next chair; Mr. Powell’s term ends in May. The rate-setting body typically turns to rate cuts when the economy is softening in an effort to spur growth. But the current economic picture hasn’t been entirely clear given the volatility of President Trump’s policies on tariffs, along with the broader effects of his restrictive immigration policies and widespread federal job cuts — all of which have made forecasting a challenge.
Here is where various rates stand now.
Auto Rates
What’s happening now: Auto rates have been largely stable but remain elevated, while transaction prices are rising slowly and unevenly, according to Kelley Blue Book, though tariffs threaten to push prices higher.
Car loans tend to track with the yield on the five-year Treasury note, which is influenced by the Fed’s key rate. But other factors determine how much borrowers actually pay, including your credit history, the type of vehicle, the loan term and the down payment. Lenders also take into consideration the levels of borrowers becoming delinquent on auto loans. As those move higher, so do rates, which makes qualifying for a loan more difficult, particularly for those with lower credit scores.
The average rate on new car loans was 7.3 percent in June, according to Edmunds, a car shopping website, unchanged from May and June 2024. Rates for used cars were higher: The average loan carried an 10.9 percent rate in June, largely unchanged from May and down slightly from 11.5 percent in June 2024.
Where and how to shop: Once you establish your budget, get preapproved for a car loan through a credit union or bank (Capital One and Ally are two of the largest auto lenders) so you have a point of reference to compare financing available through the dealership, if you decide to go that route. Always negotiate on the price of the car (including all fees), not the monthly payments, which can obscure the loan terms and what you’ll be paying in total over the life of the loan.
Credit Cards
What’s happening now: The interest rates you pay on any balances that you carry had edged slightly lower after the most recent Fed cuts, but the decreases have slowed, experts said. Last week, the average interest rate on credit cards was 20.13 percent, according to Bankrate.
Much depends, however, on your credit score and the type of card. Rewards cards, for instance, often charge higher-than-average interest rates.
Where and how to shop: Last year, the Consumer Financial Protection Bureau sent up a flare to let people know that the 25 biggest credit-card issuers had rates that were eight to 10 percentage points higher than smaller banks or credit unions. For the average cardholder, that can add up to $400 to $500 more in interest a year.
Consider seeking out a smaller bank or credit union that might offer you a better deal. Many credit unions require you to work or live someplace particular to qualify for membership, but some bigger credit unions may have looser rules.
Before you make a move, call your current card issuer and ask them to match the best interest rate you’ve found in the marketplace that you’ve already qualified for. And if you do transfer your balance, keep a close eye on fees and what your interest rate would jump to once the introductory period expires.
Mortgages
What’s happening now: Mortgage rates have bounced around a bit in recent months, but have remained within a relatively tight range, staying below 7 percent. Rates peaked at about 7.8 percent late last year and had fallen as low as 6.08 percent in late September.
Rates on 30-year fixed-rate mortgages don’t move in tandem with the Fed’s benchmark, but instead generally track with the yield on 10-year Treasury bonds, which are influenced by a variety of factors, including expectations about inflation, the Fed’s actions and how investors react.
The average rate on a 30-year fixed-rate mortgage was 6.74 percent as of July 24, according to Freddie Mac, down slightly from 6.75 percent the previous week and 6.78 percent a year ago.
Other home loans are more closely tethered to the central bank’s decisions. Home-equity lines of credit and adjustable-rate mortgages — which carry variable interest rates — generally adjust within two billing cycles after a change in the Fed’s rates.
Where and how to shop: Prospective home buyers would be wise to get several mortgage rate quotes — on the same day, since rates fluctuate — from a selection of mortgage brokers, banks and credit unions.
That should include: the rate you’ll pay; any discount points, which are optional fees buyers can pay to “buy down” their interest rate; and other items like lender-related fees. Look to the “annual percentage rate,” which usually includes these items, to get an apples-to-apples comparison of your total costs across different loans. Just be sure to ask what’s included in the A.P.R.
Savings Accounts and C.D.s
What’s happening now: Everything from online savings accounts and certificates of deposit to money market funds tend to move in line with the Fed’s policy.
Savers are no longer benefiting from the juiciest yields, but you can still find returns at online banks of 4 percent or more.
Traditional commercial banks’ yields, meanwhile, have remained anemic. The national average savings account rate was recently 0.56 percent, according to Bankrate.
Where and how to shop: Rates are one consideration, but you’ll also want to look at providers’ history, minimum deposit requirements and any fees (high-yield savings accounts don’t usually charge fees, but other products, like money market funds, do). DepositAccounts.com, part of LendingTree, tracks rates across thousands of institutions and is a good place to start comparing providers.
The yield on the Crane 100 Money Fund Index, which tracks the largest money-market funds, was 4.11 percent as of Monday, down from 5.13 percent at the end of last June. (Check out my colleague Jeff Sommer’s columns for more insight into money-market funds.)
Student Loans
What’s happening now: There are two main types of student loans. Most people turn to federal loans first. Their interest rates are fixed for the life of the loan, they’re far easier for teenagers to get and their repayment terms are more generous.
For the first time in five years, rates on student loans, for money borrowed from July 1 through June 30 of next year, dropped modestly.
Undergraduate loans now carry a rate of 6.39 percent, down from 6.53 percent. Rates on loans for graduate and professional students eased to 7.94 percent, from 8.08 percent, while rates on PLUS loans — extra financing available to graduate students and to parents of undergraduates — fell to 8.94 percent, from 9.08 percent.
These rates reset on July 1 each year and follow a formula based on the 10-year Treasury bond auction in May.
Private student loans are a bit of a wild card. Undergraduates often need a co-signer, rates can be fixed or variable and much depends on your credit score.
Where and how to shop: Many banks and credit unions want nothing to do with student loans, so you’ll want to shop around extensively, including with lenders that specialize in private student loans.
You’ll often see online ads and websites offering interest rates from each lender that can range by 15 percentage points or so. As a result, you’ll need to give up a fair bit of information before getting an actual price quote.
Ron Lieber and Ann Carrns contributed reporting.
